November 11, 2012

Bits Bucket for November 11, 2012

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Comment by frankie
2012-11-11 03:08:08

NEW DELHI: It’s a curious paradox. Prices of residential units in the National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) have risen sharply in 2012 even as sales have plummeted. However, sales continue to be steady in Bengaluru.

According to a report by real estate consultancy firm PropEquity, apartment sales in NCR dropped by 42% in January-August 2012, compared with the same period last year. In contrast, the average price has risen 14% to Rs 3,797 per sq ft so far this year.

Market watchers explain that areas like Gurgaon — where prices have almost doubled in the past two years — have virtually reached saturation point. Developers are being forced to launch new projects in remote areas with undeveloped infrastructure. Hence, they are finding it difficult to sell units there.

http://timesofindia.indiatimes.com/business/india-business/Home-sales-drop-as-prices-surge/articleshow/17123622.cms

Sounds familiar, California 2005?

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 09:12:48

Prices of residential units in the National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) have risen sharply in 2012 even as sales have plummeted.

“Sounds familiar, California 2005?”

Try California 2012, except prices are currently at peak dead cat bounce level rather than a bubble top.

INVENTORY SHORTAGE HINDERS HOMEBUYERS

Multiple bids make sellers happy, but many owners still face negative equity, low prices
Written by Lily Leung
12:01 a.m., Nov. 11, 2012
Updated 8:59 p.m. , Nov. 9, 2012

Ashley and Brian Standing have been house hunting for about a year, and they’re a little tired of the hunt.

In the past 12 months, the young San Diego couple have put in 80 to 100 offers on homes in the $500,000 to $750,000 range in areas like Point Loma, Ocean Beach and Bay Park. They admit some of their offers have been lowballs, but they learned quickly that those wouldn’t work. At times, they’ve tried bidding $20,000 to $30,000 above the asking price but still nothing.

“It’s been insane,” Brian said. “When we first got into the market, there was still more inventory. I don’t know if at the beginning we were more picky as far as putting in offers. But over the last nine months, we’ve been operating as not-as picky.”

Contradictory outlooks

Roughly 5,300 homes are on the market in San Diego County at this moment, half of what we saw just a year ago. That’s the lowest number in at least 3½ years, says the San Diego Association of Realtors. Inventory has dropped for 15 straight months.

But is this the type of dynamic the county needs to finally see a fully recovered real estate market?

“It’s not a situation where the demand is overwhelmingly strong,” said Michael Lea, professor at SDSU’s Corky McMillin Center for Real Estate. “We still have a housing market that is not well. There are few houses on the market. That’s what’s unusual. It’s stemming from the fact that housing prices are up but are still way off their peaks and there’s negative equity.

Comment by scdave
2012-11-11 09:59:03

Inventory has dropped for 15 straight months ??

Thats also what I have seen here…The confusing part for me is why ? Even when we have had a very strong local economy we would have inventory 3-X what we have now if not more…We just don’t seem to have much movement…People moving out…People moving up…

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 11:31:28

The confusing part for me is why ?”

Not at all. This is a natural consequence of financial intervention to prop up housing prices against the backdrop of an extreme dearth of fundamental demand. Would-be sellers have been officially encouraged to set their hopes set prices which just aren’t supported by the fundamental situation in the U.S. household sector.

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Comment by GrizzlyBear
2012-11-11 15:05:37

The inventory is there, it’s just not for sale. There are innumerable MSM articles, many posted here by both Ben and Bomb Thrower, where the banks admit they don’t want to “flood the market” with houses and drive down prices, so they trickle onto the mls in a slow drip. There are tens of thousands of empty homes in seemingly every city, which sit vacant and prop up both rental and purchase prices. Accounting shenanigans allow this. In the old days, they were forced to take their losses. Not these days. It’s good to be a banksta’.

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Comment by Benny Goodman
2012-11-11 11:15:10

Most of India has no infrastructure. Much like NYC. :-)

 
Comment by GrizzlyBear
2012-11-11 12:45:30

The global real estate bubble is still going strong. Nothing has been learned, and the crash hasn’t really started, even in the US. People wrongly assert that Florida, Nevada, Arizona, etc. have bottomed, but that’s fantasy. In northern Nevada, a manufactured home sitting on an acre of desert scrub is still priced at more than $150k. That’s absolutely absurd. There is a LONG way to go.

Comment by CeeCee
2012-11-11 20:48:20

How long can this really go on? I mean, if all of these countries are in on it, couldn’t they keep propping it up for decades?

 
Comment by rms
2012-11-11 22:57:09

“The global real estate bubble is still going strong.”

Since everyone is enjoying a RE debt bubble it will make the eventual Weimar style inflation that much easier to implement.

 
 
 
Comment by bailouts are coming
2012-11-11 05:57:14

Got student loans?

bailouts are coming

Comment by scdave
Comment by Party On Wayne
2012-11-11 08:14:34

“While most community college students don’t take loans, a growing number now borrow to cover living expenses.”

Comment by Party On Wayne
2012-11-11 08:25:36

Door number one:

Graduate from college and struggle to find a good job so as to earn a living AND pay back the loans I ran up.

Door number two:

Continue on with my education AND my borrowing and thus delay my entry into the Real World for as long as possible.

Decisions, decisions …

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Comment by ecofeco
2012-11-11 12:45:10

Good luck with number 2:

http://www.huffingtonpost.com/2012/11/10/cal-state-super-seniors_n_2111274.html

In recent years, state university systems in Arizona, Florida, Illinois, North Carolina and Wisconsin have begun imposing extra fees on super seniors to encourage students to graduate earlier.

Don’t you love it when they change the rules?

 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 09:31:06

The point of community college used to be in part to give a way into the university system for people of limited means. The need to take out loans to even afford attending community college is a very bad sign for the Millenials.

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Comment by In Colorado
2012-11-11 10:09:51

One thing to remember is that not all CC’s are as cheap (tuition wise) as those in California. Attending a CC here in the Centennial state costs almost $4000 in tuition and fees alone for a whole year.

 
 
 
 
Comment by In Colorado
2012-11-11 07:54:16

If you mean for the banks, student loans are already guaranteed by the feds. If you mean for the borrowers, fat chance.

Comment by goon squad
2012-11-11 08:11:30

Ignore the $1 trillion student loan debt elephant in the room and keep pimping about “pent-up demand”, NAR-scum.

 
 
Comment by aNYCdj
2012-11-11 07:56:12

Bailouts…. I just want 5 gallons of GAS for my car….called 2 stations NO gas…the 3rd the phone is off the hook…oh well ill walk there and its probably closed….

Comment by bailouts are coming
2012-11-11 08:18:50

“Bailouts…. I just want 5 gallons of GAS for my car….called 2 stations NO gas…the 3rd the phone is off the hook…oh well ill walk there and its probably closed….”

Not to worry, FEMA is all over it.

bailouts are coming

 
Comment by WT Economist
2012-11-11 08:50:12

I just want a few more pounds of air for my bike tires.

Comment by bailouts are coming
2012-11-11 09:05:55

“I just want a few more pounds of air for my bike tires.”

Sorry, I think FEMA ran out of air the day before they ran out of water last week.

bailouts are coming

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Comment by Get a tire pump
2012-11-11 09:23:23

Get a tire pump.

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Comment by Benny Goodman
2012-11-11 11:16:49

Next time fill up BEFORE the hurricane hits.

Comment by Carl Morris
2012-11-11 15:31:16

I assume he did, but now it’s running out.

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Comment by GrizzlyBear
2012-11-11 16:38:13

Some pretty mean-spirited comments considering a natural disaster has cut off his access to the essentials of life.

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Comment by aNYCdj
2012-11-11 18:32:11

Alls well I got a Full tank of gas a whole $40 worth…Im Rich!

 
 
 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 09:25:26

So if you have college-aged kids, would this be a good time to load up on student loan debt, with a plan to qualify for a bailout when they become available?

Maybe we should just tell our kids they are on their own financially once they are college age, and encourage them to rely as much as possible on student loan and bailout funds?

Yes, There Will Be A Student Loan Bailout

Posted by: Mark Gimein on November 2, 2011 at 10:28 AM

When will the student loan bailout happen? And more important, will it be students who get bailed out, lenders or both?

If you think it’s too early to be asking this, you haven’t been looking at the numbers coming out about student loans. On the We Are The 99% photoblog, where protesters hold up signs explaining their grievances, just about every third sign cites crushing student debt load.

The Atlantic’s Daniel Indiviglio put together the killer chart on this two months ago, showing student loans rising 511% in just over a decade. The Atlantic figured the total of outstanding student loans at $550 billion. Reuter’s Felix Salmon points out that’s too low. A widely repeated USA Today story said student loans would reach $1 trillion this year. That’s closer (federally guaranteed loans alone exceed the Atlantic’s $550 billion), though, as Salmon shows, USA Today seems to be badly confused about the source of that $1 trillion.

More interesting than the total number, though, is how it will get repaid. The New York Fed has put together a beautiful (read: ugly) map of student loan delinquencies, which nationally stand at 10.6% of loans. You can get a rough sense of it here, with the darker colors showing greater defaults. But to get the full force of it you should click through to the New York Fed site and tap the student loans tab. Roll over the darker counties and you’ll see delinquency rates of more than 20%. Across the Southeast you can see a belt of bad student loans forming, much like the foreclosure belt that stretched across the Southwest.

The problem here is not just that the student loan delinquency rates are rising. It’s that the numbers that are out there don’t seem to be giving the whole picture. The Department of Education dings schools whose students default within two years of graduating. Borderline schools—especially for-profit ones, who depend on student loans for the overwhelming bulk of their revenue—do their best to make sure their grads file all the right deferral forms and avoid delinquencies for those two years, even if they can’t actually make payments. After that, they’re on their own.

Comment by polly
2012-11-11 12:38:15

I think it was said up higher, but why would you think there is going to be a BANK bailout of student loans. Some of the loans are federally guaranteed. If the student doesn’t pay, the government does and then collects from the former student over the rest of his or her life (including garnishment of social security). The private ones are basically all co-signed by someone else and can’t be discharged in bankruptcy. So the bank can go after the student and the co-signer forever. FOREVER. While adding interest and penalties along the way.

I think the income based repayment plans for the government backed ones are about as far as a bailout is going to go. Someday they may actually pass the proposal that if you do the income based repayment plan for 20 years or so, anything left will get forgiven, but that proposal required actual payments to be made - years in which you didn’t pay anything because you were broke didn’t count towards the 20 years.

Getting rid of the bankruptcy exception could be done on a going forward basis with the private loans, but that would completely dry up the supply. You’d practically have to put the money to pay it off in an escrow account to get a loan.

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:47:46

“…but why would you think there is going to be a BANK bailout of student loans.”

I don’t really have an opinion on this issue at the moment, but I am trying to mentally prepare myself for future bailout announcements that might be made.

Thanks for sharing your nuanced thoughts on this topic.

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Comment by polly
2012-11-11 13:51:51

Your future bailout announcement would go something like this:

There is already no chance that a bank giving out a student loan can lose any money unless it is a private loan and they approve a co-signer that has no money, no income and dies in that state plus the original borrower never has any income in their entire life. We are re-confirming this outcome.

When there is no chance for the banks to lose any money, why would they need a bailout?

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 14:27:37

Polly, I totally agree with your point.

However, I note that somebody brought up the topic of student loan bailouts. I’m wondering why they thought this might be an issue if it isn’t?

 
 
 
 
 
Comment by our sloth in Florida
2012-11-11 06:00:22

Occupy Activists Buy, ‘liberate ‘ Bad Debt

A project called Rolling Jubilee is soliciting donations to buy up bad debt at bargain prices and cancel them…

http://www.newser.com/story/157354/occupy-activists-buy-liberate-bad-debt.html?utm_source=part&utm_medium=slate&utm_campaign=greatfinds_rss

Comment by Combotechie
2012-11-11 07:12:49

From the video:

“The math is on our side.”

Because?

“If we can raise fifty-thousand dollars we can buy a million dollars worth of debt and abolish it.”

LMAO.

Comment by our sloth in Florida
2012-11-11 08:16:35

Why do you find that amusing?

Comment by Combotechie
2012-11-11 08:27:18

Because it is.

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Comment by Combotechie
2012-11-11 08:31:58

These debts are selling at five cents on the dollar which means these debts are close to being uncollectable.

So these guys want to raise money to buy debt that probably won’t be to be collected anyway.

 
Comment by our sloth in Florida
2012-11-11 08:33:37

It’s funny because it is?

 
Comment by our sloth in Florida
2012-11-11 08:36:30

But what they’re saying is true, no? They can buy bad debt, at pennies on the dollar, that otherwise would be bought by debt collectors, and instead forgive it.

 
Comment by Combotechie
2012-11-11 08:42:24

Why bother? Why raise money to buy debt that is not going to be collected?

 
Comment by our sloth in Florida
2012-11-11 08:55:02

I assume they’re buying debt that would otherwise be purchased by debt collectors.

 
Comment by Combotechie
2012-11-11 09:19:17

Question: Who decides whose debt gets bought up and forgiven and whose doesn’t?

If the guys running the show decide to have their own debt given preference and bought up and forgiven ahead of everyone else who, outside of the inner circle, would ever know?

 
Comment by Get a tire pump
2012-11-11 09:29:00

Or, someone in the inner circle could buy up debt for, say, three cents on the dollar and sell it to the group for five cents on the dollar and pocket the difference.

 
Comment by our sloth in Florida
2012-11-11 09:32:50

Ah…now it can work, but could be abused. Good shift.

They’re still setting it up, and assure that they won’t do such a thing. I assume they will do it all openly. I’m sure there will be alot of people watching them. Especially their detracters.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 09:34:32

“Why bother? Why raise money to buy debt that is not going to be collected?”

Kneecap preservation funds?

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 09:35:37

“Or, someone in the inner circle could buy up debt for, say, three cents on the dollar and sell it to the group for five cents on the dollar and pocket the difference.”

Sweet! 67% capital gain on sub-subprime debt!!

 
Comment by ahansen
2012-11-11 11:09:14

“Why bother…?”

Because some people take their debts seriously and struggle to pay them off, even if it’s just at $25 a month. To not a few families, that extra $25 means new shoes for Dad, allergy medicine for the kid, a slight cushion in case the electric bill goes over budget. If nothing else, it gets the burden off their minds so they can take a deep breath and start afresh.

Not everything is about raising money; even raising money. If these guys are on the level, bless them. And pooh on you cynics.

Nyah.

 
Comment by Combotechie
2012-11-11 12:13:54

“Because some people take their debts seriously and struggle to pay them off, even if ti’s just at $25 a month.”

These debts are not be going to be sold off at five cents on the dollar. The debts that will be sold off at five cents on the dollar are going to be the ones people have walked away from.

 
Comment by Combotechie
2012-11-11 12:20:27

Plus, if you are going to raise money to buy off debts that are uncollectable you are not helping the one who owes the debt - he’s already out of the picture. The one you are helping is the one who holds the paper.

If the one who holds the paper is the debt collector then he is the one you are helping.

 
Comment by our sloth in Florida
2012-11-11 12:53:09

If debt being sold at 5¢ on the dollar will never be repaid, then why do debt collectors buy it?

 
Comment by polly
2012-11-11 14:50:34

It could be worth buying it at some level (less than 5 cents on the dollar I would think) just to keep it out of the courts. They cost money too. And the delays on the resolution of other business cases isn’t costless either.

 
Comment by Combotechie
2012-11-11 15:48:26

If part of a thousand dollar debt can be collected by a bill collector by offering to accept, say, five-hundred dollars to clear the debt then there is a good chance the debtor will agree.

Buying a thousand dollar debt for fifty dollars and then turning this fifty dollar debt purchase into a five-hundred dollar return is good business if it can be done enough times. And this is what I see as happening first hand.

The reason I know this is because of my job I have access to a lot of telephones and a lot of the phone numbers that go with these telephones used to belong to deadbeats and when the telephone numbers are disconnected by the deadbeat (or are disconnected from the deadbeat) some of them get reassigned to the telephones I have access to and I get an opportunity to take the calls if I so choose. And many of these calls I choose to take can be quite interesting.

 
Comment by our sloth in Florida
2012-11-11 16:09:37

Weak.

 
Comment by Combotechie
2012-11-11 16:15:13

Wrong.

 
Comment by our sloth in Florida
2012-11-11 16:33:46

Anecdotal.

 
 
 
 
 
Comment by bailouts are coming
2012-11-11 06:11:54

Should I Stay Or Should I Go lyrics
Songwriters: Jones, Mick; Mellor, John;

Darling you got to let me know
Should I rent or should I own?
If you say that rentings fine
I’ll be here till the end of time
So you got to let me know
Should I rent or should I own?

It’s always tease tease tease
You’re happy when I’m on my knees
One day is fine, and next is black
So if you want me off your back
Well come on and let me know
Should I rent or should I own?

Should I rent or should I own?
Should I rent or should I own?
If I rent there will be trouble
And if I own it will be double
So come on and let me know

This indecision’s bugging me
Esta indecision me molesta
For some who bought, their house was free
Si no me quieres, librame
Exactly whom I’m supposed to be
Digame quien tengo ser

Don’t you know which house even fit me?
Sabes que ropas me queda?
Come on and let me know
Me tienes que decir
Can I still get me a Robo?
Me debo ir o quedarme?

Split

Should I rent or should I own now?
Me entra frio por los ojos
Should I rent or should I own now?
Me entra frio por los ojos
If I rent there will be trouble
Si me voy va a haber peligro
And if I own it will be double
Si me quedo va a ser doble
So you gotta let me know
Me tienes que decir
Cause I`m no Deadbeat I don`t know?

bailouts are coming :)

Comment by frankie
2012-11-11 07:00:44

You better watch out
You better not cry
Better not pout
I’m telling you why
Bail outs are coming to town
There making a list
And checking it twice;
Gonna find out Who’s naughty and nice
Bail outs coming to town
They see you when you’re sleeping
They know when you’re awake
They know if you’ve been bad or good
So be good for goodness sake!
O! You better watch out!
You better not cry
Better not pout
I’m telling you why
Bailouts coming to town
Bailouts are coming to town

 
 
Comment by bailouts are coming
2012-11-11 06:39:56

I love me some bailouts

bailouts are coming

Comment by In Colorado
2012-11-11 07:59:28

Silly Rabbit! Trillion dollar bailouts are for banksters!

 
 
Comment by bailouts are coming
2012-11-11 06:48:34

Got unfunded pension liabilities? Not to worry

bailouts are coming

 
Comment by bailouts are coming
2012-11-11 06:52:54

17% of FHA loans delinquent in September

bailouts are coming

Comment by azdude
2012-11-11 07:29:15

those FHA loans are back by insurance which is back by a printing press which is backed by you my friend.

 
 
Comment by Spook
2012-11-11 07:15:11

Communism is a democracy where nobody has any money?

How am I doing?

Comment by Combotechie
2012-11-11 07:18:13

Not well.

 
Comment by aNYCdj
2012-11-11 07:18:28

hey Spook we need to start attacking all this black on white crime….everyday its getting worse… what do you suggest?
http://www.nydailynews.com/new-york/teen-gropes-woman-24-central-park-cops-article-1.1200156

Comment by Spook
2012-11-11 08:09:16

Look man, Ive given up on all black people except 1– myself.

All hope for black people went out the window with the re election of Obama. It was difficult before but now its impossible. They don’t want to hear logic or facts; its like argueing with a woman…

(((shakin my head)))

Just gonna hafta let this thing burn itself out.

The locusts are gonna eat everything. When thats gone, they will eat each other.

My suggestion?

Try to avoid them.

Good luck.

I’ll see you on the beach.

Comment by our sloth in Florida
2012-11-11 08:18:03

Put on your sunscreen.

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Comment by Spook
2012-11-11 10:48:11

Im about the complexion of…hmmm… say Eric Holder? in the winter time.

Ive never found the need for suntan lotion until about 4 years ago I went motorcycling on skyline drive in Shenedoah while wearing a tee shirt with the arms cut off.

a day later I noticed flaking peeling skin on the top parts of my arms; I had no idea what it was at the time but soon realized it was sun damage.

I was very disapointed to find out even the sun hates me.

(((shakin my head)))

 
Comment by Prime_Is_Contained
2012-11-11 11:16:31

a day later I noticed flaking peeling skin on the top parts of my arms; I had no idea what it was at the time but soon realized it was sun damage.

Might also have been a combination of sun and wind damage. The wind can really dry out your skin when it is going by at 70mph…

 
Comment by aNYCdj
2012-11-11 11:22:06

ya ever go to bike week at Myrtle beach? My father had a Honda cavalcade touring bike….and there was a a large over 50year old motorcycle club out of Danbury CT

Used to go with some buddies and mom followed in the car, stayed at a war buddy home in Benson NC

Loved the mule day parades…

 
 
Comment by polly
2012-11-11 09:22:52

Yup. Giving up. That is what you should do. I should do it too. Like that kid on the Metro yesterday wearing over-sized sweat pants and a little scruffy facial hair. Except that he was carrying a bunch of books on econometric modeling. Or the security guard on the Catholic University campus who was practically ready to give me a tour of the Basilica when I asked for some directions. He thanked me profusely when I showed him the flyer for the concert I was attending because it was going to allow him to give more accurate directions to more people as they arrived. Or the gentleman in the pew in front of me during the concert of 16th and 17th century church music. I saw what he put in the basket when they came around for donations. It was more than I put in.

You two need to grow up.

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Comment by RioAmericanInBrasil
2012-11-11 09:50:45

Look man, Ive given up on all black people except 1– myself.

I’d put the odds 50/50 that you are Black.

(But there’s nothing wrong with that) :)

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Comment by Spook
2012-11-11 11:07:44

Comment by RioAmericanInBrasil
2012-11-11 09:50:45

I’d put the odds 50/50 that you are Black.
————————–

Ah yes, our resident “bi66erologist” pipes in.

Flawed as it is, I do understand your logic; being as admitting you are a black person in cyberspace is to instantly discredit everything you say.

The truth is black and ugly, thats why nobody wants it except the people who have nothing else.

Free your mind bro, and embrace your inner negro grave site.

 
Comment by ahansen
2012-11-11 11:34:15

You know what would be really cool, Spookster? Is if you told us you’re female. Can you just imagine how that would tweak the dialog?

It sounds to me like you’ve gone and boxed yourself into your self-image. If you think like an alienated racist misogynist, you’re likely going to flock with alienated racist misogynists, and let’s face it, that’s kind of against your own self interest, is it not?

Occasionally, liberal hearts do have their charms….

 
Comment by Spook
2012-11-11 13:57:53

Yes indeed, as demonstrated by the gracious and ever beneficent Allena whose name means “woman the bear cannot defeat” in the tribe of “coonfoot”.

We can’t all be like you (matter of fact, I woulda been hanging bears from trees if they did that to me; BTW, was the bear black?)

Also, I want to get your book but will only do so if I can get it in paperback. Im not buying a “kindle” because n_____s will just steal it the next time they break in my house. Books on the other hand are like kryptonite to these savages. But I digress.

The black box is the smallest of all boxes and I am not its architect. Somebody put me here and is trying to keep me here. So excuse me if my attempts to escape this box disturb someone’s nice, happy liberal life.

I

Hate

This

Box.

My self interest is to get out of this box.

I may not be qualified to do it, and I may even fck it all up and make it worse in the process…

But the key is, I was never supposed to be in the box in the first place.

I’ll see you all on the beach.

 
Comment by our sloth in Florida
2012-11-11 14:50:13

YOU announced you were black. You didn’t have to.

You could have escaped your box- here at least-had you wanted.

 
Comment by ahansen
2012-11-11 15:42:39

Three things:

Kindle reader is available as a free (easy) download for your mac or pc at amazon. Print publication is all about the money, and I’m not. (One of those odd birds for whom doing something for money sucks out all my passion for it.)

Yep, it was a California black bear up at my spring.

Where do you live? I can’t imagine a college town in the country where you wouldn’t be KingNegro. Seriously. Do you have any idea how many kids would read your poetic rants? Reread Eldridge Cleaver’s “Soul On Ice” and snap outta it. She didn’t deserve you.

 
Comment by ahansen
2012-11-11 15:49:31

Forgot to add:

…up at my spring, > but it was brown. <

FYI: Just to muddle the metaphor, I’ve seen black Black Bears, rust Black Bears, red Black Bears, brown Black Bears, black and white Black bears, brown and white Black bears, and a Golden Black Bear (which incidentally is the emblem on the CA State flag.)

 
Comment by CharlieTango
2012-11-11 16:02:05

The bear on the current flag of California was modeled on the last wild Californian grizzly bear in captivity. The bear, named “Monarch”, was captured in 1889 by newspaper reporter Allen Kelley, at the behest of William Randolph Hearst

 
Comment by tj
2012-11-11 16:41:27

Reread Eldridge Cleaver’s “Soul On Ice” and snap outta it. She didn’t deserve you.

read his ’soul on fire’ instead. he wrote it after he became much wiser from experience.

 
Comment by RioAmericanInBrasil
2012-11-11 21:02:05

I do understand your logic; being as admitting you are a black person in cyberspace is to instantly discredit everything you say.

You don’t understand my logic at all. What you just wrote isn’t even close.

 
 
 
 
Comment by our sloth in Florida
2012-11-11 07:20:53

Communism is democracy if the people voted for it, and can end it or alter it by voting.

Comment by bailouts are coming
2012-11-11 07:37:20

“Communism is democracy if the people voted for it, and can end it or alter it by voting.”

Can`t be done.

bailouts are coming

 
 
Comment by bailouts are coming
2012-11-11 07:45:55

Suicide nets and free healthcare are the new democracy

Got an iphone?

bailouts are coming

Comment by goon squad
2012-11-11 08:34:00

Speaking of suicide nets, this from MarketWatch - Foxconn Mulls Detroit, Los Angeles for Factory Site:

“Sina News reports that Foxconn, which makes components for Apple Inc. products among others, may open a factory in the United States. Among the sites being evaluated are Detroit and Los Angeles.

Since labor is so cheap in China, it is hard to see why Foxconn would make such a decision and hurt its margins. One reason may be political. Foxconn’s labor abuses have been in the news almost every week. Apple probably is concerned about the reaction of American consumers, and whether these reactions eventually will hurt sales. A factory in America, particularly in a place as badly damaged by the drop in manufacturing jobs as Detroit, would help Foxconn’s image, even if there is a financial cost. The factory also would help silence the “China has taken American jobs overseas” movement.”

Comment by bailouts are coming
2012-11-11 09:03:18

“Speaking of suicide nets”

For some reason (and I know this is really bad) just reading that made me laugh really hard.

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Comment by Benny Goodman
2012-11-11 11:19:44

That story was debunked last week.

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Comment by Benny Goodman
2012-11-11 11:27:33

Communism is Democracy after the bankers have stolen all the peoples money.

Comment by nickpapageorgio
2012-11-11 12:45:16

Communism had killed over 100 million people in peace times. Got death?

 
 
 
Comment by goon squad
2012-11-11 07:20:06

Globe and Mail - Why did a Toronto semi go for $133,000 over asking?

“Last week, just as the tail end of hurricane Sandy was lashing Toronto, five sets of bidders were sitting in parked cars outside one Leslieville house.

By the end of the evening the detached, house on Morse Street had sold for $932,000 and the sellers and buyers were inside sharing a bottle of champagne.

“We popped a bottle of bubbly and had a little toast,” says Kevin Huestis. He and his wife Catherine sold the house for $133,000 more than the asking price of $799,000.

While some houses and condo units are languishing in Toronto’s choppy real estate market, other homeowners are still reporting swift-moving deals out there. Properties in prime locations are selling within a week and sometimes generating a bidding war.”

www DOT theglobeandmail.com/life/home-and-garden/real-estate/why-did-a-toronto-semi-go-for-133000-over-asking/article5086363/

Comment by Combotechie
2012-11-11 07:23:01

“Why did a Toronto semi go for $130,000 over asking?”

Because some people have more money than sense?

Comment by azdude
2012-11-11 07:26:55

a fool and his money are soon parted?

Comment by bailouts are coming
2012-11-11 07:54:17

a fool and his money are soon bailed out

bailouts are coming

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Comment by goon squad
2012-11-11 07:28:21

Where have we heard this before? From the article:

“Ms. McAdory says she and her husband hope to keep their existing house as an investment property and rent it out, just as they still own the condo unit that launched them into the market.

“We believe that it’s always going to be a good investment to have real estate in the downtown area in Toronto.”

 
Comment by Prime_Is_Contained
2012-11-11 10:29:10

Because some people have more moneyborrowing capacity than sense?

FTFY.

 
Comment by aNYCdj
2012-11-11 11:27:32

drug money ….easy come easy go?????

 
 
 
Comment by goon squad
2012-11-11 07:26:03

WSJ - International Buyers: O, Say, Can You Ski?

“Where do home buyers from foreign countries go to hit the slopes? The British love Aspen, Colo. Canadians seek out Big Sky, Mont. And Aussies flip for Park City, Utah.

Those are three of the top ski destinations in the U.S. that were searched online from abroad between July 2011 and June 2012, according to real-estate website Trulia.

In the Trulia analysis of six ski areas—Aspen, Vail and Telluride in Colorado; Jackson Hole, Wyo., Big Sky and Park City—five see the most views from Canada, the U.K. and Australia. But Vail, Colo., sees the most traffic from Mexico.

Foreign buyers tend to zero in on properties that are amenity-rich, as the properties are usually a second or third home. Rustic log cabins and ski-in-ski-out mountain chalets are at the top of their wish lists, says Lisa Delaney, vice president of marketing for Jackson Hole Sotheby’s International Realty.

After decades of traditional mountain design-heavy overhangs, a plethora of pine wood, a deer’s head hung in the entryway-ski homes across the globe are shedding the antlers.

Ms. Delaney says the international client base for Jackson Hole has grown nearly 10% over the past year.

“You used to go to the ski areas and only hear English,” she says. “Now you hear all sorts of languages. It really feels like an international resort.”

http://online DOT wsj DOT com/article/SB10001424052970204712904578094741683574194.html?mod=WSJ_hpp_MIDDLE_Video_Top

Comment by Overtaxed
2012-11-11 08:10:14

You need your head examined if you live in Britain, or, even worse, Australia and buy a vacation home in CO/UT.

AU to UT is what, about a 20 hour flight? How often do you think you’re actually going to be able to use a house that’s on the other side of the globe? If someone gave me a house in AU I’d probably make it there once a year for about 2 weeks. What do you think realistic upkeep costs are on a little ski palace in CO? 10-20K/yr? So, you could stay in your place or rent a hotel room (or a mansion) for 1K/night for the time you’ll be there!?

The only reasons to do something like this:

1) You think RE prices are going to rise where you are buying and that will offset the annual operating costs
2) You can spend months there every year
3) You are fabulously wealthy and losing 10’s of thousands of dollars every year is a rounding error

Anybody want to guess my thoughts on why these people are buying?? :) Without breakneck appreciation, none of these places can make any kind of financial sense.

Good god, why on earth would you fly from AU to the US for skiing? Buy something in Alps, it’s 1/2 the distance and the skiing is better.

Comment by our sloth in Florida
2012-11-11 08:31:33

Remember, the barbarians in the rest of the world get a lot more vacation time.

Comment by Benny Goodman
2012-11-11 11:31:04

Some of them lazy fools actually get holidays off, too.

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Comment by ecofeco
2012-11-11 13:08:15

PAID holidays, those damn commie socialists!

 
Comment by frankie
2012-11-11 13:39:11

In the Uk

Currently the legal minimum amount of holidays is 5.6 weeks.

If you work a 5 day week this means 28 days (but this can include bank holidays).

If you get the 8 bank holidays off then you must get at least another 20 days.

If you don’t get the bank holidays then you must get 28 other days.

How does the US compare?

 
Comment by our sloth in Florida
2012-11-11 13:56:58

“How does theUS compare?”

WE get nothing. Jealous much?

 
Comment by Benny Goodman
2012-11-11 14:55:04

Current legal minimum in the US is 0 paid holidays and 0 paid vacation days.

Also, 0 paid sick days.

 
Comment by our sloth in Florida
2012-11-11 16:14:20

Free market competition with third world slave states bears a strange and bitter fruit.

 
 
 
Comment by polly
2012-11-11 09:34:11

If they come to the US regularly for business and can extend the stay for a few days, at their condo it might be more than just two weeks a year total.

That being said, it still has to be cheaper to get a hotel or rent a place. And then you aren’t stuck always being in Vail or where ever. You can sometimes be in NY or FL or CA.

Comment by In Colorado
2012-11-11 10:13:50

I think its a prestige thing, to be able to brag about a “home” in Aspen, even if it’s just a cramped studio apartment.

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Comment by jbunniii
2012-11-11 11:09:50

As long as they’re lying, why not brag about a “home” in Aspen without buying anything at all?

 
Comment by polly
2012-11-11 14:55:05

Because someone might ask if they can borrow it. This is also a reason for it not to be a tiny studio.

 
 
 
Comment by Kirisdad
2012-11-11 13:00:24

Your flight times are way off. Utah is probably a 13hr flight and the alps is 24hrs of airtime.

Comment by Overtaxed
2012-11-11 14:46:38

Sorry, I wasn’t clear, I was suggesting the Alps as a more reasonable choice for those in the UK.

For those living in Australia, I guess UT is as reasonable a choice as anything, pretty much everything is a million miles away. :) I’d guess that India would have great skiing, and that’s probably a bit closer..

Either way, buying a house on the other side of the globe for a ski retreat, assuming you actually have to work a normal job and can only spend a few weeks a year there? Seems crazy to me.

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Comment by frankie
2012-11-11 15:01:03

The Southern Alps is a mountain range extending along much of the length of New Zealand’s South Island, reaching its greatest elevations near the island’s western side. The term “Southern Alps” generally refers to the entire range, although separate names are given to many of the smaller ranges that form part of it.

The range includes the South Island’s Main Divide, which separates the water catchments of the more heavily populated eastern side of the island from those on the west coast. Politically, the Main Divide forms the boundary between the Canterbury and West Coast Regions.

Depends what Alps’s he’s referring to.

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Comment by ahansen
2012-11-11 15:55:46

“Why on earth…?”

Because you lend them out to your friends and associates and they lend you theirs in Antigua and Bali.

 
 
 
Comment by our sloth in Florida
2012-11-11 07:38:24

http://apnews.myway.com/article/20121110/DA2FDVPO1.html

Argentine sailors brandish weapons to prevent Ghanaian officials from moving seized ship in debt dispute.

Comment by bailouts are coming
2012-11-11 08:49:35

Funny you should mention Ghana. It seems according to my company credit card bill that I was there a few months ago. Not only was I there but I must have had a really good time because I spent $8,000 in 1 hotel in 1 weekend.

It was fun explaining to the fraud dept, of the CC co. that if they looked at the card use over the last 15 years it had never been used south of Ft Laudedaale or north of Stuart Fl. and never used for anything besides gas, building materials or an occasional business lunch in South Florida. I also asked them how they thought I filled up my tank in Jupiter at 4PM on Friday and made it to Ghana Africa to charge $3k at 7PM the same night.

Really screwed up thing is that they ended up paying the bill. I proptested as loudly as I could but they said they had to because it was their fault.

bailouts are coming

Comment by our sloth in Florida
2012-11-11 09:22:01

You should seize a Ghanaian ship.

 
Comment by Bluestar
2012-11-11 10:07:07

Our digital money system is dangerous as it is now. Nobody is going to like the solution though, implanted biometric ID. Once we cross that line your virtual identity is at the mercy of both computer error and government control not to mention your ability to even log on to any network interface point, ATMs/telephone/utilities or any ’smart’ device. Thought it was telling the new 007 movie featured a biometric gun for James Bond. They can drop that old cliche about ‘license to kill’ because Q can revoke it with a push of a button. You know how to adapt to this? I would have to go back and live on the technology of the 1950s I guess.

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 11:35:14

“…implanted biometric ID.”

I find the implant idea beyond strange and unnecessary. One could base biometric ID on fingerprints, irises or even DNA typing (once the technology advances that far) without any need for physically intrusive implants of any kind.

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Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 11:38:01

P.S. I may have mentioned once or twice that I have a SIL who has alerted all her family members about Obama’s secret plan to force all Americans to get chip implants that will make us easier prey for Chinese predatory lenders…

 
Comment by Prime_Is_Contained
2012-11-11 11:41:46

One could base biometric ID on fingerprints, irises or even DNA typing (once the technology advances that far) without any need for physically intrusive implants of any kind.

+1. Not the mention the fact that any implantable device can be duplicated, hacked, or replaced with a similar device designed to fraudulently mis-represent identity. So what good is it?

And good luck arguing that it wasn’t you who did something when everyone has absolute faith in the implants.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 11:48:38

“So what good is it?”

I suppose chip implants could be used to convince idiots to believe in fraudulently deliberate cases of mistaken identity.

Any reasonable person can immediately see that chip implants are unnecessary to implement biometric ID technology.

 
Comment by Bluestar
2012-11-11 11:57:31

Actually I assumed the biometric implant would be DNA based as the only truly unique ID available. Your personal ID device would need to be designed to only work while in contact with living flesh, powered by the host’s physiology and capable of 2 or more interfaces(passive and active). We humans have built a very complex world and it will require something like this at some point. If imagine if some cyber attacker has fully compromises Visa or MasterCard right now would they tell us or just turn off the network till they can implement another encryption scheme?

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:13:42

Every human cell already contains a DNA-based biometric implant. Why add a superfluous and inferior human-created implant when nature has already provided one inside the nucleus of each and every cell?

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:15:11

All that is really needed is a one-to-one mapping from an individual’s DNA to other personal information. The only group I can think of which might pose a problem would be identical twins, triplets, or higher multiples, whose DNA is identical.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:16:14

P.S. Strange attractors (fingerprints, irises, etc) could be added to the DNA ID file to handle the case of uniquely identifying identical twins…

 
Comment by Bluestar
2012-11-11 12:41:50

Mr. Bomb, I’m pretty sure everybody’s DNA mutates differently so is there really any such a thing as twins after about 6 months? Also please understand I never said ‘chip’ as I would expect this new ID technology to be based on nano technology, and microbiology with 98% of the functionality placed on the external interface (note the interface requires 100% functionality to operate, no exceptions). The implant requirement was to make sure there was a physical connection and that someone couldn’t steal your tooth brush and digitally assassinate you.

 
Comment by B. Durbin
2012-11-11 12:50:30

Hooray! Someone who UNDERSTANDS the similarities and differences of identicals!

 
Comment by Happy2bHeard
2012-11-11 13:12:11

“Why add a superfluous and inferior human-created implant when nature has already provided one inside the nucleus of each and every cell?”

You would also need to account for chimeras, people for whom some cells have different DNA than other cells.

http://www.npr.org/templates/story/story.php?storyId=1392149

http://www.mymultiplesclerosis.co.uk/misc/chimera.html

How would a blood transfusion, transplantation, or viruses affect DNA ID?

 
Comment by ecofeco
2012-11-11 13:16:43

Biometrics are bunk.

The current problem is security execution as in… it isn’t. Very few places ask for my ID when using plastic.

Simple, effective but not done.

The second is common sense. Fraud departments that can’t do simple math (there is no WAY to get from point A to B in the time shown) need to be fired.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 14:18:52

“Mr. Bomb, I’m pretty sure everybody’s DNA mutates differently so is there really any such a thing as twins after about 6 months?”

It doesn’t mutate as much as you think it does.

 
Comment by Bluestar
2012-11-11 15:19:10

You are splitting hairs. Just the same I wouldn’t trust finger prints, retina scans etc. There is a equally important reason this technology is going to come, the internet. Looks like to me at some point we are going to move toward internet zones. First by region, then nation, then by state or district and eventually to city and zip code. There will still be open access zones but only for data not people. I’m really not looking forward to it but it sure seems the technology wants to move this way. Governments and global corporations will love it but the people will always resist it too. Know your enemy.

 
 
 
Comment by ecofeco
2012-11-11 13:11:37

“…they said they had to because it was their fault.”

And THAT is what’s wrong with this country.

How the hell is it their fault? How is a victim at fault?

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 14:25:48

Telling the world that becoming a victim absolves you from responsibility is a great way to encourage more people to walk the plank to victimhood.

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Comment by oxide
2012-11-11 07:39:32

The banner ads on my internet are trying to convince me to buy a new house. They show a saleswoman at an obvious Home Depot-ish store with the quote “You bought a used house; your weekends are mine….a new house doesn’t need anything except you to enjoy it” etc. They fail to mention that new houses are condos and townhomes 45 minute drive from work, on no land, and probably have an HOA fee.

Meanwhile, taking a tally of the time spent on my house… well, I would say I’ve lost about half my weekends and about two weeks off work to the house. Mind you, this is a house with deferred maintenance, and I’ve been here less than a year. Once I get the place up to speed, it won’t take much time to maintain.

Comment by azdude
2012-11-11 07:46:13

did you sign up for MY Lowes yet?

2012-11-11 08:57:26

Once I get the place up to speed, it won’t take much time to maintain.

LOL

Till the next hurricane/snow storm.

You’ll figure it out eventually. They all do.

 
 
Comment by P.T. Barnum
2012-11-11 07:50:28

“The banner ads on my internet are trying to convince me to buy a new house.”

That’s because you already demonstrated to the world that you are a sucker who will most likely fall for anything.

 
Comment by Pimp Watch
2012-11-11 07:53:35

“it won’t take much time to maintain.”

LMAO

Comment by our sloth in Florida
2012-11-11 08:45:20

I’m also puzzled by the maintenance my house supposedly requires. I’ve got a brick house with trim and windows covered in vinyl or aluminum. The kid next door will mow my yard for 20 bucks, though i usually prefer to do it myself. Other than cleaning (which everyone does), what is all this maintenace I’m supposed to be doing?

Comment by Pimp Watch
2012-11-11 09:31:00

Ask your underwater landlord.

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Comment by our sloth in Florida
2012-11-11 09:40:39

I don’t have one.

 
Comment by Pimp Watch
2012-11-11 10:25:12

That must be quite the shanty then.

 
 
Comment by Spook
2012-11-11 10:52:29

“Other than cleaning (which everyone does), what is all this maintenace I’m supposed to be doing?”

you’ll find out when some of the section 8 community moves in next door.

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Comment by Prime_Is_Contained
2012-11-11 11:22:22

Eventually that “no maintenance” brick exterior needs to be tuck-pointed—or the mortar turns to dust and it all falls down.

Eventually your chimney needs to be re-lined. If it wasn’t lined to begin with, the acids in the flue gases are in the process of eating both brick and mortar from the inside-out.

Any painted surfaces? Facia, door, trim, etc? That’s gotta be re-painted relatively frequently.

What’s your sewer line made of? Concrete? Eventually that will fail as well.

Eventually your windows will need to be upgraded.

Do you have any trees in the neighborhood? Do you clean out your gutters?

Just because maintenance doesn’t happen on every component every year doesn’t mean that over a 100yr period a lot of it doesn’t need to happen.

Or you can just skip doing any of it, and accept that the deferred maintenance will eventually be reflected in the final sale price. :-)

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Comment by Benny Goodman
2012-11-11 11:37:25

You’ll be dead before the mortar crumbles.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 11:40:41

Great post to remind greater fools that costly maintenance is always necessary to keep the value of homeowners’ investments from crumbling into dust.

I wonder when the masses who believe home ownership is the path to riches will finally catch on?

 
Comment by our sloth in Florida
2012-11-11 12:14:33

In the long run we’re all dead.

 
Comment by Blue Skye
2012-11-11 19:47:29

Like anything, paying for quality upfront reduces maintenance costs. It isn’t the maintenance cost on a modest home that drowns most people, it’s overpaying, over filling, over decorating and the stinking relentless debt.

I don’t have to worry about repointing. Ever. Well there is the bridge, it might need reglazing.

 
Comment by our sloth in Florida
2012-11-11 20:08:25

Lol. As if boats don’t have thrice (at least) the maintenance of a house. They’re absolutely for suckers, or the rich.

Or are you talking about the house you recently bought?

 
 
 
2012-11-11 08:48:15

I know, right?

Comment by scdave
2012-11-11 09:00:21

FPSS…

And yet the rent in Mountain View, CA that my sister pays in a prime part of the town is lower than ever in the last 7 years ??

Maybe the case for your sister, and maybe even in the apartment or house that she lives in but Mt. View rents are definitely higher today then they were in 2005…

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2012-11-11 09:23:35

Salaries are higher too.

 
Comment by scdave
2012-11-11 09:44:42

Salaries are higher too ??

I am to detached from the tech industry to really know…If you want to talk about the trades side I can tell you that incomes are way down…

 
2012-11-11 09:58:19

Where do the trades’ salaries ultimately come from?

Also, don’t forget that the bubble artificially inflated the trades’ salaries in the first place.

 
Comment by SV guy
2012-11-11 10:02:10

“If you want to talk about the trades side I can tell you that incomes are way down…”

The skilled Union trades are boomin’ right now locally.

 
Comment by scdave
2012-11-11 10:08:36

Also, don’t forget that the bubble artificially inflated the trades’ salaries in the first place ??

NOOOOO question about it…

Where do the trades’ salaries ultimately come from ??

I would say that the actual wages are about the same generally speaking…The reason the income is down is because of lack of work…Plumber still charges $80. per hour + but he is only getting lets say, 36 hours of work per week…Kind of the same thing with the small generals…They get a job, and complete it but may sit around for two weeks before another starts…

 
2012-11-11 10:11:52

Plumber still charges $80. per hour + but he is only getting lets say, 36 hours of work per week…

Sounds like the price charged needs to drop then.

That’s deflationary, my friend.

I see opportunity for someone smart enough to understand this.

 
Comment by scdave
2012-11-11 10:17:15

The skilled Union trades are boomin’ right now locally ??

Yes, I am aware of that SV guy….But, I am sure that you know the union trades are more inclined to the commercial side which has seen a mini boom here as of late…With some of the big projects that are going up (49′r Stadium) they have sucked up a lot of the union workforce…A good friend of mine works for a drywall company that bid on the 49′r stadium…He said he was going to need 400+ drywall & metal framers to man-up the job and he was not quite sure where he would get them…

You would think that would then leave all the smaller commercial & residential stuff available to the remaining trades personel giving them a lot of work but there just does not seem to be enough of it…It may just come down to money…The big commercial stuff money is a non-issue…The smaller stuff, funding comes into play…

 
Comment by In Colorado
2012-11-11 10:19:09

It depends on the “plumber” (or tradesman in general). The ones that prospered during the bubble still drive around in their Turbo diesel F-350’s, writing up overpriced, $80/hr quotes. They land so few jobs that they actually do the work themselves now.

The guys that used to work for them, if you can find them, (word of mouth works best) charge a lot less.

 
Comment by scdave
2012-11-11 10:38:15

That’s deflationary, my friend ??

Yes, assuming there is competition but all the cheap, uninsured, unlicensed, incompetent labor that was here 5 years ago is long gone…Even mom & pop homeowners have wised up and will not use home depot labor for the job because of liability…

Generals won’t touch them anymore either…To many stories going around of these laborers actually snipping off a pinky to get the fat payday and then heading home…

The guys that used to work for them, if you can find them, (word of mouth works best) charge a lot less ??

Are they licensed & insured ?? Probably not…

 
2012-11-11 11:00:30

Yes, assuming there is competition but all the cheap, uninsured, unlicensed, incompetent labor that was here 5 years ago is long gone.

Didn’t you just say that were not able to get all the jobs that they wanted? That the hours were simply not there?

And then you argue that this is not deflationary?

Are you Colorado-ing or Washington-ing away? :P

 
Comment by Pimp Watch
2012-11-11 11:37:07

“Are they licensed & insured ??”

Are the allied trades? No.

Are the allied trades doing residential? No. They never have nor will they ever.

You’re talking about two different worlds.

 
Comment by our sloth in Florida
2012-11-11 15:41:45

“two different worlds…”

It’s all FIRE to me.

 
Comment by oxide
2012-11-11 15:58:06


rents are definitely higher today then they were in 2005…

…Salaries are higher too.

Isn’t that the point behind buying a house? Your salary goes up, rents around you go up, your house payment remains the same.

 
Comment by Blue Skye
2012-11-11 19:54:33

“Your salary goes up….”

Exactly! That model has been successful for the past 60 years or so. It’s in our genetic memory.

 
 
 
 
Comment by Muggy
2012-11-11 09:26:46

“The banner ads on my internet ”

Mine are relentlessly hounding me to renew my annual passes to Legoland.

Hmm…

 
Comment by oxide
2012-11-11 12:14:54

Thanks everyone for replying to a housing-related post on a housing-related blog.

Faster pussycat… “eventually they all figure it out.” Got any evidence for this? The only “figuring out” I did was that facing the rent increases in my area was giving me far more heartburn than repairing my house. Now granted, this is MY situation only. The equation pencils out differently for others.

Comment by B. Durbin
2012-11-11 12:59:33

To a certain extent, there’s a subset of the population that likes doing house repair work too, so that can be added to the value calculation. My SiL and her family have been continuously fixing up and improving their houses for more than a decade, and they like doing it, so that must count too. (I, myself, find some satisfaction in gardening and repainting.)

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 14:31:17

“To a certain extent, there’s a subset of the population that likes doing house repair work too, so that can be added to the value calculation.”

One of my BiL’s is such an individual. He likes doing house repair work so much, that he keeps the several houses he owns in a state of perpetual disrepair, just to make sure he always has projects to satisfy his hobby desire on the weekends.

This drives Lil’ Sis nuts…

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Comment by Blue Skye
2012-11-11 20:11:06

“repairing my house…”

It’s really all psychological. Rent is “cash in the trash”. My debt is going to make me rich… You bet on stability, raises, growth, appreciations. If there is instability, deflation, sinking, shrinking, you are financially screwed. Time will tell. You can write all the equations you want.

 
 
 
Comment by bailouts are coming
2012-11-11 07:43:03

House prices would drop like a rock if it were not for the fact that

bailouts are coming

Comment by Pimp Watch
2012-11-11 07:54:37

The rock is falling and velocity is picking up.

Comment by bailouts are coming
2012-11-11 08:28:26

“The rock is falling and velocity is picking up.”

You should see the looks on peoples faces when they tell me how well I did waitng out the housing bubble and buying now when I tell them….

Yup, if what should happen happens I will be $40k upside down next year.

It`s about the same looks I got in 2005 when I told them house prices were going to crash.

Then I am asked….

Well what are you going to do if that happens?

I`ll pay it off, I like the house.

Met with the same puzzled look. I don`t think I fit in this world anymore.

bailouts are coming

Comment by our sloth in Florida
2012-11-11 09:26:01

“waiting out the housing bubble and buying now…”

So it’s time to buy?

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Comment by Alpo-Slop's Nightmare
2012-11-11 09:40:13

Why buy when prices are falling?

 
2012-11-11 09:45:14

Pompous pumping p1mper ponce.

 
Comment by our sloth in Florida
2012-11-11 09:53:19

Sounds like everyone wants to know why you thought it was the right time to buy, jethro.

 
Comment by bailouts are coming
2012-11-11 10:24:14

“So it’s time to buy?”

I have been here for 6 months and I really like the house and the hood so let`s see.

I have paid $1,200 less in that 6 months than I would have paid in rent to my DBLL.

My DBLL is now missing $10,200 rent in the last six months. :) Priceless

The DBLL`s house still sits empty with a pending short sale.

I got a place that I had been looking at for 2 years (as it sat empty with the servicer telling me it was still owned by the person who signed for the $390,000 mortgage in 2006) I paid $190,000 which in my opinion is about $30k-$40k more than it would be worth had none of this happened. However had none of this happened I would not have gotten a mortgage @ 3.9% However, had the price of this house been $190,000 in 2006 I could have just about paid cash. So what`s that a wash, I got screwed, you got screwed, we all got screwed and the banks and my 2 DBLLs made out like bandits? I don`t know, you tell me.

“So it’s time to buy?”

Given that I had found a house that had 98% of what I wanted and my wife and I really liked it, my best guess for me was yes. Knowing the little I know about you and where you want to or have to live, my best guess for you would probably be no.

If I can paraphrase Forrest Gump

I had rented for 7 years, 2 months, 14 days, and 16 hours. … [pause] I’m pretty tired, I think I’ll go home now. .

Hope that helps

 
Comment by our sloth in Florida
2012-11-11 10:34:26

“…I’m pretty tired, I think I’ll go home now…”

Sounds like a reeltor ad.

 
Comment by Pimp Watch
2012-11-11 10:56:31

So you paid about 50% of peak. Smart man.

Jethro For President, 2016.

 
Comment by our sloth in Florida
2012-11-11 11:00:49

Pimp Watch states it’s time to buy!

 
Comment by bailouts are coming
2012-11-11 11:04:33

sloth in Florida

what did your name used to be?

 
Comment by bailouts are coming
2012-11-11 11:14:30

“Pompous pumping p1mper ponce.”

Uh oh the limp wristed libs are out in force trying to jump on someone like a bunch of girls again. So brave in groups like alpha queen and tomato lady. I know how disappointed alpha was when I purchased and he couldn`t get anyone to join in and beat on me. Such a disappointed little gangsta girl he was. :)

 
Comment by Pimp Watch
2012-11-11 11:32:00

“Pimp Watch states it’s time to buy!”

I did?

Jethro For President, 2016.

 
Comment by Pimp Watch
2012-11-11 12:20:30

Hey Jethro….. what did you pay? $50/sq?

 
Comment by our sloth in Florida
2012-11-11 14:04:02

Keep up with the homophobia, right-wingers. It’s fun kicking your a$$es at election time.

BTW- I must tell missus sloth I’m gay. She’ll probably agree.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 14:32:39

“I must tell missus sloth I’m gay.”

Are you seriously married and gay? That must be tough…

 
Comment by our sloth in Florida
2012-11-11 14:45:18

“That must be tough.”

Just found out myself. So far, so good.

 
Comment by our sloth in Florida
2012-11-11 15:03:35

“What did your name used to be?”

Who the F are you, “bailouts”?

 
Comment by our sloth in Florida
2012-11-11 15:08:39

“That must be tough.”

Easier than being married to a Mormon, I’d imagine.

 
Comment by SFBayGal
2012-11-11 16:31:52

Our sloth in Florida were you known as Alpha Sloth?

 
Comment by our sloth in Florida
2012-11-11 17:50:55

C’est moi, SFBag. How ya doin’?

 
Comment by Muggy
2012-11-11 19:13:11

“Comment by our sloth in Florida
2012-11-11 17:50:55

C’est moi, SFBag. How ya doin’??

Permanent move?

If you’re in the Tampa Area, we should grab a beer.

 
Comment by our sloth in Florida
2012-11-11 20:19:51

I’m on the east coast muggy, but I’ve got some friends in Ybor that I visit occasionally. I’ll let you know next time I’m down there.

 
 
 
 
 
Comment by bailouts are coming
2012-11-11 08:03:17

Walking On Sunshine Lyrics
by Katrina And The Waves

Oh! Ohhhh yeeeh
I used to think maybe you loved me now baby I’m sure
And I just cant wait till the day when you knock on my door
Now everytime I go for the mailbox , gotta hold myself down
Cos I just wait till you write me your coming around

I’m living on bailouts , wooah
I’m living on bailouts, woooah
I’m living on bailouts, woooah
and don’t it feel good!!

Hey , alright now
and dont it feel good!!
hey yeh

I used to think maybe you loved me, now I know that its true
and I don’t want to spend all my life , just in waiting for you
now I don’t want u back for the weekend
not back for a day , no no no
I said baby I just want you back so I don`t have to pay

woah yeh!
I’m living on bailouts , wooah
I’m living on bailouts, woooah
I’m living on bailouts, woooah
and don’t it feel good!!

Hey , alright now
and don’t it feel good!!
hey yeh ,oh yeh
and don’t it feel good!!

Living on bailouts
Living on bailouts

I feel the love,I feel the love, I feel the love that’s really real
I feel the love, I feel the love, I feel the love that’s really real

I’m on bailouts baby oh
I’m on bailouts baby oh

I’m living on bailouts wooah
I’m living on bailoutswooah
I’m living on bailouts wooah

and don’t it feel good!!
I’ll say it again now
and don’t it feel good!!

cont till the end

bailouts are coming

 
Comment by WT Economist
2012-11-11 08:54:25

I hear that they are thinking of raising the Medicare age to 67 — for those in younger generations. The big savings is having them die uninsured before they become eligible. But impose any reduction for today’s seniors? Nah.

The underlying trend is more and more health care spending on fewer and fewer people, with others paying and getting nothing when they are in need.

Obamacare is a mess because it was glommed on to the exiting mess, but it also reversed that trend slightly. Which is the real reason those who consider themselves vested — today’s seniors and the public employee unions, for example –were against it.

The good news it appears likely, based on the election, that those born after 1958 will at least have medical marijunna and legal assisted suicide to ease them off the planet a few years (or decades) earlier.

Comment by Diogenes (Tampa, Fl)
2012-11-11 10:31:56

I find the marijuana issue a rather funny one myself.
I am, and have always been a “States-Rights”, anti-Federalist supporter. I have no problem with the States telling the FEDs to go screw themselves and stay out of their jurisdictions for matters that are not truly “national”.
I know the Lefties here and elsewhere will try to make ANY issue a national issue, even the fat content of food, or the amount of salt on your fries.
Any issue not specifically enumerated in the Constitution should be, as stated in the Constitution, left to the States.
So, it was with amusement this morning as I watched Candi Crowley interview Jerry Brown.
He said the Feds should respect States Rights concerning the recent votes on Marijuana. He was going to review court cases for drug possession (I agree that putting people in jail for smoking pot is stupid), but he cautioned about the ill effects of drugs and the ‘gateway’ of drugs to other crimes.
He sounded like a conservative republican.
Concerning their huge budget deficits, he leaned Left and said basically the “private sector” was doing better than the “public sector” and there needed to be some taking to redistribute the money, but they had that in hand. More Taxes.
He figured they could close the gap in deficits over the next 7 years.
However, he cautioned that the State needed to be fiscally responsible. The “wish list” of things to do with increased revenues was endless and he already had stacks of proposals for more spending.
He cautioned that the State needed to be more prudent, and he, as governor, would provide the leadership to control spending.
At least, that was the gist. I about fell over.
I don’t see it happening.
The good news, of course, is that with Democrat control of everything, they can’t blame the Republicans when Utopia is magically achieved by taxing the “wealthy”. I don’t seen them as being “prudent”. Ever.
The Pigs have taken over the farm and the trough needs to be refilled. After a good meal they will all roll over and enjoy a mud-bath in their sty, awaiting another feeding. Charge the farmer for more supplies.

 
Comment by Benny Goodman
2012-11-11 11:35:43

Getting rid of the insurance industry’s exemption to the Sherman Anti-trust Act would be a huge start.

Comment by ecofeco
2012-11-11 13:24:48

Yes, it would, but keep dreaming.

 
 
 
Comment by Bluestar
2012-11-11 09:05:32

Economic news from the gas lands.
Maybe sub $6 natural gas is like artificially low interest rates?

‘Impairment’ costly for oil, gas producers”
The decade-low gas prices seen during that period are forcing producers to write down the value of their reserves. The official term is “impairment,” and it’s adding up to billions of dollars in losses this year.

For example, Chesapeake Energy took a $3.3 billion charge, which also included some non-producing leases the company let expire. For Devon Energy, the largest producer in the Barnett Shale, the charge was $1.1 billion.
http://www.star-telegram.com/2012/11/09/4402294/impairment-costly-for-oil-gas.html#storylink=cpy

As big as those number seem it was nothing like the hit the industry took when oil dropped below $70 back in 2008. Read it closely and try to figure what the real price of Nat. Gas is. Hint: the marginal cost of production of estimated reserves is way out of whack with the actual long term cost of production. So in a nutshell the real cost of natural gas should be 2x what it is selling for now but mismanagement by the industry has distorted the price, driving out small operators and consolidating power into fewer hands while masking the fact that so much of the estimated reserves are going to cost more to extract than we are led to believe. There were some old oil field roughnecks that warned us this fracking production shoots up in the beginning but then falls off much faster than vertical wells do.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 09:15:08

Suppose they gave a fiscal cliff and nobody jumped?

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 09:20:25

A closely-watched pot never boils over.

PERSONAL FINANCE
November 10, 2012, 8:11 p.m. ET

After the Election, Markets Head for the ‘Cliff’
By VERONICA DAGHER

Some investors were hoping the past week’s elections would bring some clarity to a market that’s been operating under a fog of uncertainty.

Not so much.

On Tuesday, America re-elected President Barack Obama and voted to keep the House and Senate under the control of Republicans and Democrats, respectively.

Wall Street’s hangover from betting on the wrong presidential horse helped contribute to what turned out to be a 313-point drop in the Dow Jones Industrial Average on Wednesday, the biggest drop since Nov. 9 of last year.

The biggest factor: Pesky issues that have been looming over the market—not the least of which is the dreaded so-called “fiscal cliff”—were once again top-of-mind for investors.

A pair of positive economic reports helped lift stocks Friday. But not enough. The Dow industrials dropped 2.12% for the week. The Standard & Poor’s 500-stock index gave up 2.59%, and the Nasdaq Composite fell 2.43%.

Conciliatory postelection remarks from politicians this week gave some investors hope. But apparently there’s still plenty of skepticism on Wall Street about Washington’s ability to avoid the mix of automatic spending cuts and tax increases set to take effect at the start of next year if a budget deal isn’t reached.

“The clock is ticking,” says Quincy Krosby, market strategist with Prudential Financial PRU -0.09% .

The Congressional Budget Office says that going over the fiscal cliff would send the U.S. economy back into recession next year and cause the jobless rate to jump to 9.1% by the end of 2013—serious setbacks at a time when the economy has been slowly showing some signs of improvement.

The preliminary Thomson Reuters/University of Michigan consumer-sentiment index for November rose more than expected, and wholesale inventories in September increased from the prior month, at the fastest pace this year. Import prices rose in October as well, besting expectations.

Still, unless Congress takes action, federal income, dividend and capital-gains tax rates will rise on Jan. 1. The estate tax, meanwhile, will revert to a higher rate and apply to smaller estates.

A World of Worry

Mix in lingering worries about the European debt crisis, global growth, weaker corporate profits and plenty of pessimistic earnings outlooks for 2013 and you’ve got the recipe for jittery investors.

Wasif Latif, vice president of equity investments at USAA, says there is one thing investors may be able to count on until the fiscal cliff is sorted out: more volatility. The longer it takes to reach a compromise, the more volatile the markets will remain, he notes.

“The market wants to be rid of this uncertainty,” Mr. Latif says.

 
 
Comment by bailouts are coming
2012-11-11 09:19:32

Bailouts and Defaults Coming to a City Near You

posted on 07/02/12 at 09:55 AM

Greece, Spain, Bailouts, Default, Housing Crisis, Unemployment, Italy, Fannie Mae, Quantitative Easing, Unfunded Pensions, Portugal …every day it seems these ugly words beat up the market. Where does it all end?

A city named, umm, let’s call it “Broketon” has a great idea to revive the economy. Broketon thinks it can revitalize its downtrodden downtown district.

There is one slight problem. Broketon is well…broke. The local factory that employed many Broketon residents closed down a generation ago. Faced with lowered tax revenues, Broketon raised taxes on citizens and the remaining surviving businesses. Many of the people and businesses targeted for the tax increases, in turn, moved out. Broketon is already in debt just maintaining the local streets, bridges, water department, etc. They can’t borrow money at a decent rate to build a hockey arena. The solution? Create an “authority” that would be in charge of the new project!

(Uh oh bailouts are coming)

http://community.tradeking.com/members/bigdog/blogs/102072-bailouts-and-defaults-coming-to-a-city-near-you - 48k -

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 09:40:31

Did the rabid neocon attack dogs decide to take Sunday off?

Comment by Pimp Watch
2012-11-11 09:41:32

No idea but don’t get the partisan douchebags spun up today.

 
2012-11-11 09:48:23

Please don’t poke the beast.

Comment by Bluestar
2012-11-11 10:48:24

Yeah that tactic worked so well in 2010 when the Tea Party was created by a rant on CNBC, funded by Dick Armey, Glen Beck and the Fox All-stars amped up their base in the face of a huge D win in 2008. It was a brilliant power grab and I have no interest in seeing any of those type of people in government. There is plenty of room for moderate conservatives who care about the environment, education and sensible market regulation. Some guys that think the only thing that matters is the reality of 1776 and that’s a hard sell in the age of quantum physics. I would love to see Banana, Dan and Nick draft a new 2012 constitution and bill of rights. What would they keep and what would they replace? Would they put in civil rights, better separation of church and state or less, realistic limits on personal weapons, torture OK?, corporations are people?
No, I see no reason to repeat the mistakes of 2010, they lost.

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 11:49:46

“…moderate conservatives…”

Got oxymoronica?

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Comment by Albuquerquedan
2012-11-11 13:02:20

I like the present bill of rights. The only think I would add to the constitution is a constitutional amendment requiring that 2/3 of the members of the respective houses had to vote for deficit spending.

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Comment by Happy2bHeard
2012-11-11 13:33:49

Got fiscal cliff?

 
Comment by Albuquerquedan
2012-11-11 13:46:54

We would not be facing it had we had that amendment in place.

 
Comment by Benny Goodman
2012-11-11 14:59:51

Yeah right.

You are forgetting that the Iraq War and Afghanistan War didn’t even appear on the budget.

 
Comment by Happy2bHeard
2012-11-11 17:44:18

“We would not be facing it had we had that amendment in place.”

If we implement it, we will face a bigger cliff than the one coming up in January. We can’t go back in time and change history.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 17:47:06

“You are forgetting that the Iraq War and Afghanistan War didn’t even appear on the budget.”

Yep. It’s kind of odd to rant endlessly about excessive expenditures on government without even identifying what they are.

 
 
 
 
Comment by our sloth in Florida
2012-11-11 09:50:13

They’re restrategizing: Is there some way they can represent the oligarchy, and also get elected? They think the answer lies in a combination of expanded voter suppression and hispanic outreach.

Comment by Carl Morris
2012-11-11 09:59:05

Is there some way they can represent the oligarchy, and also get elected?

There must be, the Ds seem to be able to pull it off.

Comment by Carl Morris
2012-11-11 10:01:48
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Comment by wittbelle
2012-11-11 22:03:32

Taibbi compared Republicans to husbands from the 1950’s. BINGO!!!!!!!! They don’t just ACT like old men from the 1950’s, they ARE old men from the 1950’s and they are stuck there. Their base is angry old white men and they have values of angry old white men and the only people who they have any relevance for is angry old white men. Hey, Republicans, it’s freaking 2012! It’s been 48 years since discrimination against women and blacks was officially outlawed. What the f()ck is wrong with you people???? Get with the times!

 
 
Comment by Albuquerquedan
2012-11-11 12:39:28

The Republicans continue to control the Houses something they could not manage until 1994 after about 40 years. They also received almost as many votes in the presidential election. Their problem is that the establishment part of the party forced a very rich take-over artist to the nomination in a time when most people in the country find such a profession as the cause of a lot of their suffering. They said in exit polls that the major reason for not voting for Romney was that they did not believe he could understand their problems. The establishment also alienated many Ron Paul supporters with their tactics at the convention.

Now, the establishment wants people to believe that the only way they can win in the future is to grant amnesty. No, they just need to run someone who appeals to blue collar workers, a Reagan type candidate. Most Hispanics care more about decent jobs than they care about amnesty. Fiat money and illegal immigration are the cause of our problems and both parties do not want to fix these problems. The trade deficit is the result of being able to print money otherwise the lack of gold would have forced a cutback in spending a long time ago.

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Comment by Albuquerquedan
2012-11-11 12:44:47

Houses = house.

By the way, if you look at turnout in the last election both sides had fewer voters with the democrats having a bigger drop off than the Republicans. No, I do not buy the narrative of the dying party. I buy the narrative than more Republicans are not willing to back the establishment’s choice of candidate who will not fix the fed or immigration.

 
Comment by Albuquerquedan
2012-11-11 12:50:08

From gatewaypundit.com

Barack Obama had nearly 10 million fewer votes last night than in 2008.
But it was enough to win.
Fewer Republicans turned out to vote for Mitt Romney
Mitt won only 57 million votes.

In 2008 John McCain had nearly 60 million votes.

So do the math, the Republicans had three million fewer voters and the Democrats had 10 million fewer voters but it is the Republican party that is doomed? I am not buying it.

 
Comment by our sloth in Florida
2012-11-11 12:58:41

Your numbers don’t have much of a history of being correct, aqdan. You confidently called the election for Romney.

 
Comment by Albuquerquedan
2012-11-11 13:19:18

Never did and as many times as your side tries to say it you cannot find a single post by me that said it. In fact, just before the election, I stated that I could not call the election.

I did point out that the election was not over six months out and that in the end it would be close. Sorry if you move around a few hundred thousand votes, Romney wins. That is close even if the final electoral vote count was not.

 
Comment by Albuquerquedan
2012-11-11 13:23:46

By the way, unlike some on this board I do not have to keep changing my name due to bad predictions. I pointed out the over valued media stocks, have so far been dead on with my housing predictions, called gold in both directions, the lack of global warming, etc. I will match my record of predictions with anyone on this board. So do you want to bet on whether this year is warmer than 1998? Can’t get anyone on your side to take that bet. What is the problem do not believe in global warming?

 
Comment by Albuquerquedan
2012-11-11 13:28:19

Actually, If you don’t want to bet on global warming, we can bet on California. I bet that despite the tax increases, including the retroactive parts, they fail to actually balance their budget for fiscal 2013? Want to take that bet sloth?

 
Comment by Happy2bHeard
2012-11-11 14:27:53

“Most Hispanics care more about decent jobs than they care about amnesty.”

Arizona’s “papers, please” law may have had something to do with it. Immigration laws do not just affect illegals. Some of them also affect legal residents and citizens who happen to look like illegals.

And border groups like the Minuteman and extremist politicians like Joe Arpaio make them nervous. When the Republican party embraces those extremists, Hispanics legitimately wonder if they or their sons will be targeted.

Perry understood the complexities. Romney courted the votes of the most extreme elements in the Republican party to win the primary and he paid for it in the general election.

 
Comment by Happy2bHeard
2012-11-11 14:31:01

“Barack Obama had nearly 10 million fewer votes last night than in 2008.
But it was enough to win.
Fewer Republicans turned out to vote for Mitt Romney
Mitt won only 57 million votes.”

Does this include all of the votes that had not yet been counted as of Wednesday morning? There are still half a million votes to be counted in Arizona as of Friday afternoon.

 
Comment by Bluestar
2012-11-11 14:59:49

Dan, the climate’s global temperature is not linear and I fully expect winters to be cold and summers hot but I maintain a trend has been established. As you know ocean cycles, seasonal monsoons, animal migrations all have different response times to climate forcing so a reasonable climate scientist would expect to see a reversal of some of these discrete elements like shorter growing seasons, falling sea levels and glacier growth if the trend has reversed toward cooling. I can clearly see the global temperature has reached a new plateau and there is a pause in that one metric of temperature. Still the odds are in favor of higher highs and higher lows so I’ll take your bet. 5 Quatloos is my wager.
http://rankexploits.com/musings/2012/giss-69-up-from-september/

 
Comment by our sloth in Florida
2012-11-11 15:33:04

All regular readers know how you called the election. Liar.

 
Comment by Albuquerquedan
2012-11-11 15:36:49

Great bluestar, we only have two months left to this year so it will not be long before you are eating crow.

 
Comment by Bluestar
2012-11-11 17:15:05

I didn’t make myself clear on that. I don’t accept atmospheric temperature as the single defining indicator (or a specific year) as proof of global warming, only the trend. I need confirming evidence like lower sea levels, lower ocean heat content and shorter growing seasons. Your bet on one single variable is much like calling the DOW or S&P the single indicator as to the health of the whole world’s economy. If we are restricting our selves to just air temperatures then my bet is the global number of record high temperatures will be higher than the number of record low temperatures.

 
Comment by RioAmericanInBrasil
2012-11-11 21:10:41

(Republicans) received almost as many votes in the presidential election …in 1992, 1994, 2000, 2008 and 2012.

 
Comment by oliverks
2012-11-12 00:29:08

So do you want to bet on whether this year is warmer than 1998? Can’t get anyone on your side to take that bet. What is the problem do not believe in global warming?

How do you define global warming? Are we talking 2012 or 2013?

Oliver

 
 
 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 11:45:39

Sorry about that earlier post — my hand slipped.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 11:54:35

As for wiping up others’ messes, I’ve been a parent for eighteen years now, and cleaned up plenty of sh!t along the way. I’d be happy to continue doing this job, because there is great honor in it.

 
 
Comment by anon in dc
2012-11-11 11:33:27

Hi. Some of us keep posting about grocery store inflation. Nope just don’t see it. Though I tend to eat pretty healthy: pasta, rice & bean, etc… Even a whole roasted chicken for $5 is the special every Friday.

Comment by ecofeco
2012-11-11 13:28:24

Lucky you.

Still doesn’t mean it isn’t happening to most people.

 
Comment by aNYCdj
2012-11-11 14:39:05

SUGAR inflation warning everything is a 4 lb bag…not a 5 lb bag to be seen not even the store brand

ok I like PB sugar cookies

 
Comment by CeeCee
2012-11-12 01:42:47

Here in SoCal, I don’t see much of it. I’m guessing that’s because a lot of food is grown here and I also go to farmers markets and tend to buy in season. I also have been using less meat and dairy. However, when I go to buy more processed foods, I see it. Also, I see some items like yogurt have an increase in price and a decrease in product.

However, back where I used to live in PA, my sister tells me a lot of items are getting more expensive.

 
 
Comment by B. Durbin
2012-11-11 11:38:18

Shadow inventory update: Last week, I went walking around my mother’s neighborhood with her in Sacramento (greater suburbia.) Two full-sized blocks lengthwise and a half-circle. We saw three houses that were empty, with papers on the doors and windows, and only one house with a For Sale sign in front. It’s hard to say how long they had been empty as these do not have in-lawn sprinkler systems and it’s not uncommon to let the lawn die during our hot summers, so the “green, trimmed lawn” could have been cut months ago and let to die and is only now reviving.

These are not particularly desirable houses. My mom’s block was built in 1954, tract housing made of cinderblock and originally 3/1 or 2/1 (obviously, there have been many changes to most of the houses, but even the ‘nicest house on the block’, updated past the standards of the neighborhood by a former contractor who said “I don’t care if I’m overbuilding; I like this neighborhood and this is my house,” had its major changes twenty years back.) The next block over is newer but still forty or fifty years old. The lots, however, are nice at a quarter-acre. (In this city, .15 acre is listed as a “large lot” and lots sizes as small as .08 support full-sized houses, with the attendant ridiculous “yards.”) But it’s obviously impossible to buy a house that isn’t up for sale, even for a tear-down.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 11:58:19

Comment by Rental Watch
2012-11-10 08:38:22

The Fed is adding demand for MBS with their $40B per month purchases. They are not reducing their support (whatever it was) for 30-year treasuries. The result is increased demand for MBS, and thus those yields are moving in the direction of 30-year treasuries.

I suggest you read Glenn Hubbard’s undergraduate textbook on money and banking, where he explains the substitution effect across investment classes, as you clearly don’t understand the substitution effect.

Comment by Bluestar
2012-11-11 12:28:07

What does Hubbard think about FSAB rule 157? It was suspended in early 2009 during the Bush/Obama transition. Maybe this begs the question, should the FSAB operate outside the oversight of Congress?

 
Comment by Rental Watch
2012-11-11 16:39:14

How does Glenn Hubbard deal with manufacturing more demand of a single good (MBS) by creating money out of thin air (a la expansion of the Fed’s balance sheet)?

They aren’t foregoing the purchase of 30-year treasuries in favor of MBS. They have created more money to buy more MBS.

 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:10:59

The economist left in the lurch:

Romney’s Go-To Economist
Lucas Jackson/Reuters
R. Glenn Hubbard has been straddling the sometimes shaky line between academia and politics.
By DAVID SEGAL
Published: October 13, 2012

“I HOPE you’re sitting down for this,” said Ali Velshi, the CNN anchor, staring into the camera, his voice booming with incredulity about a campaign promise issued by Mitt Romney: that, if elected, Mr. Romney would create 12 million jobs in four years.

Having framed this idea as preposterous, Mr. Velshi introduced R. Glenn Hubbard, the dean of Columbia Business School, a Romney campaign adviser and a “very smart man,” as the host put it. So smart, Mr. Velshi told Mr. Hubbard, that “you couldn’t have been involved in the writing of that policy.” Why? “Because you would know that that is just not possible.”

Wearing a dark suit and projecting an air of geeky, avuncular calm, Mr. Hubbard appeared before a blue backdrop festooned with the words “Columbia Business School.” If he was supposed to be cowed or disarmed by the bluster or flattery, he did not show it.

“It is absolutely possible, Ali, both in terms of models of policy effects on the recovery and historical experience,” he said, in a tone that was professorial but not patronizing, “If you look at the recovery from ’74, ’75, or ’81, ’82, you can easily get job growth in this range. We have the wrong policy mix. We’ve had a nasty shock, we’re in a different situation, but we could do a lot better.”

Succinct, authoritative and unabashedly partisan. Leave aside that most economists see a vast difference between the recessions of the ’70s and ’80s and the crisis that began in 2008. This was exactly the sort of performance Mr. Hubbard has been delivering for the Republican candidate, both on television and in op-ed articles, for more than a year. Straddling the occasionally uncomfortable line between academia and politics, Mr. Hubbard is playing a role now familiar in modern campaigns: the in-house economist.

Mr. Hubbard also brings to this job a certain amount of baggage. He appeared briefly in “Inside Job,” a scathing and Oscar-winning 2010 documentary about the financial crisis. The film has a segment about high-profile professors who blessed many of the financial instruments that led to the fiasco. Enter Mr. Hubbard, who is presented as a leading thinker far too cozy with industries he ought to be assessing at a critical distance.

You have three more minutes,” he tells an interviewer who is pressing for the names of his consulting clients. And then, as his face contorts with rage, he adds, “Give it your best shot.”

MR. HUBBARD is hardly the only marquee economist to parlay his experience and stature into millions of dollars, for speeches, papers and expert witness testimony. Lawrence H. Summers, once the Obama administration’s top economic adviser, pocketed about $5.2 million in compensation for giving advice to a hedge fund. But in Mr. Hubbard’s case, some of his amply compensated work takes policy stands that buttress the viewpoints of the corporate interests that are paying him.

That’s been true of the mutual fund industry, which has paid him more than $1 million over the years. In an academic paper and a book, he took a strong position favoring the industry’s approach to fees, which critics say hurt everyday investors. He was paid what he called an honorarium of $150,000 for the academic paper by the insurance arm of the Investment Company Institute, the mutual fund industry trade and lobbying group.

“Dean Hubbard is a mercenary,” says John P. Freeman, emeritus professor of business and professional ethics at the University of South Carolina School of Law, who has accused the mutual fund industry of profiteering, “out to protect fund managers who are taking advantage of investors.”

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:19:25

Didn’t “Superstorm” Sandy end over a week ago? If so, why wouldn’t it be fully priced into the stock market by now?

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:22:59

Here is an article suggesting a lingering effect of Sandy on stock prices. Why wouldn’t the forward-looking, omniscient stock market have already fully priced in Sandy’s impact?

Nov. 11, 2012, 7:01 a.m. EST
Storm and ‘cliff’ muddy economic picture
Anxious investors look to Washington to resolve budget standoff
By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — The U.S. economy entered the fourth quarter on solid footing, but the aftershocks of hurricane Sandy and the looming “fiscal cliff” could make for some shakier moments soon.

The hurricane tore a devastating path through New York and New Jersey and also hurt other states, disrupting the routines of consumers, retailers and manufacturers alike. The effects of the storm are already making it harder to get a read on how the economy is performing, though it’s only a temporary condition.

More long-lasting worries among businesses and investors center on the fiscal cliff — the onset of big tax increases and deep federal spending cuts on Jan. 1. These changes will take effect unless a divided Washington strikes a deal to put them off.

Fear of a fiscal cliff — some economists warn it could cause another recession — was palpable in U.S. markets last week.

The Dow Jones industrial average, for example, fell several hundred points and closed below 13,000 for the first time in more than two months.

“The primary topic on everyone’s mind was the year-end fiscal cliff,” said Neil Dutta, head of economics at Renaissance Macro, after meetings with investors.

Muddied outlook

For the upcoming week, most of the economic data is likely to be distorted by hurricane Sandy.

Take the October retail-sales report on Wednesday. Normally retail sales is a big number for Wall Street since consumer spending accounts for as much as 70% of the U.S. economy.

Yet economists surveyed by MarketWatch expect retail sales to fall 0.1% in October, a sharp reversal from September’s 1.1% gain, because of Sandy. The storm closed many stores in the Northeast and sales of items such as autos took a hit.

What’s more, gas prices leveled off in October and won’t contribute as much to retail sales. Higher gas prices had been a big contributor to the increase in consumer spending in September and August.

For consumers, of course, lower gas prices are a good thing. They get to spend more money on other goods and services they’d like to purchase. The big question is whether they bank some of that extra money instead to rebuild their savings. The savings rate has fallen sharply in the past few months.

 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:24:25

This strikes me as a great time to go to cash.

Thoughts?

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:26:42

Nov. 10, 2012, 11:05 a.m. EST
Markets eye 4 horsemen of Obama’s second term
Election Night balloons deflate quickly; huge deficits do not
By Rachel Koning Beals

Reuters
President Barack Obama and House Speaker John Boehner will try to reach a deal to avert the so-called fiscal cliff — the automatic federal spending cuts and tax hikes slated for Jan. 1 — just one of several major economic risks affecting investors.

CHICAGO (MarketWatch) — Whether you exhaled or gasped over the presidential election’s result, there’s no denying what comes next: a deficit and budget slugfest that will play out against a vulnerable U.S. economic recovery and Europe’s own debt mop-up.

That means if you believe that the so-called fiscal cliff, in the shape of a planned $600 billion of federal spending cuts and higher taxes, threatens the growth-stock strategies favored during the election runup, it may be time for a little insurance.

Stock-market Armageddon portfolio? Not quite. Canned beans? You bet.

David Rosenberg, chief economist and strategist at Toronto-based investment manager Gluskin Sheff + Associates, trotted out his “four horsemen of risk” in an August commentary, a time when trading screens flashed green and candidates’ grins flashed white.

Rosenberg’s sober point then and now: The White House occupant won’t matter much because Europe is unstable; severe drought drove up food prices in the U.S. and globally (so, yes, we need to talk about inflation); demand for U.S. exports is weakening, and the fiscal cliff, which he says threatens to erase three to five percentage points from U.S. GDP.

 
Comment by Rental Watch
2012-11-11 16:41:56

How long do you want to stay in cash?

If you want to go to cash because you think there is going to be a crash in values, and you want to buy back in when things have crashed…you could be dead on right–but you have to not be afraid to act after things have crashed.

If you want to go to cash long-term because you DON’T think inflation will be a problem, you’re playing with fire, IMHO.

 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:31:47

Is everyone financially prepared for the fiscal cliff? If so, what measures did you take? And are you worried about feeling duped if the jump never happens?

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:32:47

ft dot com
Global Insight
November 11, 2012 6:11 pm
US plays chicken on edge of fiscal cliff
By Robin Harding in Washington

Chicken is not a complicated game. Only one thing can improve your chances of winning: sending a credible signal that you will not be the person to swerve from the collision.

Election over, the Republicans and Democrats are now revving up for the fiscal cliff, and the game is chicken. If there is no deal then everybody loses; if one side swerves then the other wins; and if both swerve – extending all current policy – then we come back next year and do it all again.

In order to show that they will not swerve, politicians on both sides are publicly flirting with the idea of going over the cliff, at least temporarily.

If everybody knows how much damage this would do then the credibility of these threats is easy to assess. The danger comes, however, if people have different views of the cost, making their actions less predictable – and so far economists have not helped by sending out a mixed message.

The fiscal cliff refers to a range of tax rises and spending cuts that are due to come into effect at the end of the year, including an end to income tax cuts passed by former president George W. Bush, that in total amount to about 4 per cent of gross domestic product.

The Congressional Budget Office puts the full cost of going over the cliff at almost 3 percentage points of output and 3.4m jobs by the end of 2013. That would mean a recession. This is the scary message.

Those figures, however, describe the cost of going over the fiscal cliff and staying there for a whole year. If Congress did a deal early in 2013 then only part of the effect would be felt – for example, the Treasury might be able to keep withholding tax from pay cheques at the 2012 rate.

Going off the cliff for a couple of weeks might mean a loss of as little as 0.1 per cent of output, prompting flogging the thesaurus in a search for cliff synonyms that are closer to a nursery slope than the black run at Verbier. This is the less scary message.

Serious economic policy makers in Washington, however, consider it foolish to think that the US can go off the fiscal cliff and then painlessly climb back up.

The issue is not the percentage of spending taken out of the economy; it is the blow to confidence. Going off the cliff would be an emphatic indication that an election had done nothing to make Congress more willing to compromise.

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:50:11

“Going off the cliff would be an emphatic indication that an election had done nothing to make Congress more willing to compromise.”

Now to openly reveal my ignorance of politics: What about the very close election outcome should make Congress more willing to compromise than before?

 
Comment by Albuquerquedan
2012-11-11 12:57:29

I agree with the article except for the last sentence. Going off the cliff means that the election has done nothing to make Congress and Obama more willing to compromise. Congress should recognize that Obama did win, but Obama needs to recognize that the American people, after giving the Rs sixty + House seats in 2010, took very few House seats back. The American people rejected Romney and not the Republican views in the last election, otherwise they would have restored far more House seats to the Democrats.

Comment by Happy2bHeard
2012-11-11 15:21:24

“otherwise they would have restored far more House seats to the Democrats.”

Republicans won more House seats in Pennsylvania in 2012 than in 2010 because of redistricting. If redistricting had not happened, Democrats would have been much closer to regaining control of the House and may have actually achieved it.

In Pennsylvania, votes for House candidates were pretty evenly split and yet the GOP won 13 out of 18 seats. A fairly apportioned Pennsylvania would have resulted in 3 or 4 seats being flipped, resulting in a 14 or 16 seat majority in the House instead of 22 seats. Similar results may have affected Ohio, Michigan, Wisconsin, and Texas.

California recently went to a bipartisan commission, so the Democrats ability to redistrict Republicans into oblivion will be muted.

http://www.huffingtonpost.com/2012/11/08/house-candidates-votes_n_2096978.html

http://tpmdc.talkingpointsmemo.com/2012/11/house-republicans-majority.php

I would like to present a more non-partisan analysis, but I haven’t seen one yet.

The net result of 2010 redistricting is that Republicans may have pushed off a day of reckoning in the House for 10 years. If they fail to attract a substantial portion of Hispanic and black voters in the next 10 years, they could be in serious trouble.

I think both parties need to learn how to speak across the urban/rural divide. Rural voters are voting Republican because Democrats are not addressing their issues. I think some laws need to be written with population density in mind. In areas far from population centers, gas taxes can be onerous. In cities, gas taxes that reduce average miles travelled benefit everyone - reducing congestion and pollution.

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Comment by Carl Morris
2012-11-11 17:35:48

I think both parties need to learn how to speak across the urban/rural divide. Rural voters are voting Republican because Democrats are not addressing their issues.

Hear hear. Or just keep calling them stupid and see how quickly they come around to your way of thinking.

 
 
 
Comment by aNYCdj
2012-11-11 16:29:19

Ive got a Hummer and you have a Yugo……see who wins

—-
Only one thing can improve your chances of winning: sending a credible signal that you will not be the person to swerve from the collision.

 
 
Comment by Bluestar
2012-11-11 13:00:54

So much of this feels synthetic and virtual. Like a computer model of Sid Meier’s Civilization®. I guess I could bump up my cash stash at home a little.

 
Comment by ecofeco
2012-11-11 13:31:26

Not even remotely affected either way.

 
Comment by rms
2012-11-11 23:10:35

“Is everyone financially prepared for the fiscal cliff? If so, what measures did you take? And are you worried about feeling duped if the jump never happens?”

The best the average Joe can do in this world of asset deflation and commodities inflation is to stay out of debt, maintain enough savings to endure six months of necessary expenses, and keep your clients or employer satisfied with your performance.

 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 12:44:53

Congratulations, Mr. President. Here’s how to fix the economy.
November 7, 2012: 6:36 AM ET

In a letter to President Obama, PIMCO CEO Mohamed El-Erian offers a four-point plan for getting the country back to 3% annual growth and less than 5% unemployment.

Dear President Obama,

Congratulations on winning such a hard fought, and at times bitter, contest for the White House. In yet another illustration to the world of America’s robust democracy, you have been elected to guide our country through choppy domestic and international waters. And we fully support your efforts to improve the well-being of millions in this country.

The task facing your administration is far from easy. For the first time in a very long time, our nation faces the possibility of seeing our children’s generation end up worse off than their parents. Unemployment has been too high for too long. And every day, it risks getting embedded deeper into the structure of our economy. Poverty is rising. Our social safety nets are strained. And income and wealth inequality has reached levels that tear at the fabric of our society.

Our economic resilience seems to be declining as years of under-investment in public infrastructure exaggerate the already-devastating impact of natural disaster such as last week’s deadly Superstorm Sandy. And the room for bold macroeconomic responses is limited now that the Federal Reserve’s interest rates are floored at zero and virtually every budget — federal, state and local — is stretched.

Then there is what has set us apart for centuries from almost all other countries, and what has served many generations of Americans well: the overriding confidence of citizens in what this country provides in terms of opportunity and upward mobility; and the related notion that, with lots of hard work and a bit of luck, individuals can significantly improve their future and that of their families.

This unique and incredibly powerful American motivator is at risk. It is undermined by too much skepticism and disillusionment. And increasingly it battles understandable suspicion that the “system,” including institutions of government, is stacked against the interest of ordinary Americans.

Comment by ecofeco
2012-11-11 13:36:59

Was this author born yesterday?

De-regulation in the 1980s began the destruction of the middle class and people knew it then, but “librul” MSM successfully pitted white collar professionals against “overpaid” blue collar workers… and then it was the white collars turn.

The cooler heads were ostracized.

 
 
Comment by SF Bay Area
2012-11-11 14:30:00

We were discussing who benefits from the mortgage interest rate deduction (MID). So I thought I’d look up and post the IRS 2010 data (latest available) on the MID by income:

Returns by Income / Amount of MID
MID All Returns 380,676,165
$0-15K 8,229,943
$15K-30K 18,121,315
$30K - 15K 42,626,632
$50K - 100K 127,173,272
$100K - 200K 122,119,547
$200K - $250K 19,521,612
$250K+ 42,883,844

So about $249M out of $380M total or 65% of the MID goes to those making $50 - 200K. Only $42M out of $380M or 11% of the MID goes to those making over $250K.

I think many people here thought that a much greater percentage of the MID went to those making over $250K. But the fact of the matter is that there just aren’t that many people making over $250K. That’s not to say individually they don’t get a big subsidy. Just in aggregate it isn’t that much of the total - just 11%.

So if they kill the MID for those making over $250K they’ll save $42M out of the total ~1,200M deficit each year.

I thought that was interesting.

Thoughts?

Comment by SF Bay Area
2012-11-11 14:40:28

Doh multiply those numbers by $1,000 sorry! Here is the correction:

Returns by Income / Amount of MID
MID All Returns 380,676,165,000
$0-15K 8,229,943,000
$15K-30K 18,121,315,000
$30K - 15K 42,626,632,000
$50K - 100K 127,173,272,000
$100K - 200K 122,119,547,000
$200K - $250K 19,521,612,000
$250K+ 42,883,844,000

So about $249B out of $380B total or 65% of the MID goes to those making $50 - 200K. Only $42B out of $380B or 11% of the MID goes to those making over $250K.

I think many people here thought that a much greater percentage of the MID went to those making over $250K. But the fact of the matter is that there just aren’t that many people making over $250K. That’s not to say individually they don’t get a big subsidy. Just in aggregate it isn’t that much of the total - just 11%.

So if they kill the MID for those making over $250K they’ll save $42B out of the total ~1,200M deficit each year.

Comment by Bigguy
2012-11-11 16:11:20

And this is why “rich” will need to be redefined down from 250K + to about 75k plus with some disingenuous class warfare rhetoric and obfuscation never really saying as much. Expect the graduated phase out to push it in slowly, sans lube.

And I’m entirely opposed to the MID, don’t receive it and won’t expect it.

Comment by SF Bay Area
2012-11-11 16:21:53

Bigguy - yes or they could just inflate the wages until the bus boys make $250k+ and we’re all subject to the new “rich tax” in a few years.

LOL

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Comment by aNYCdj
2012-11-11 16:33:03

Coming soon: minimum wage $19.95 hr…

 
Comment by SF Bay Area
2012-11-11 16:47:00

I think San Francisco’s minimum wage is going up to $10.24 / hour this coming year. Not that you can live off of that in S.F unless you are homeless.

 
 
 
Comment by Rental Watch
2012-11-11 16:48:07

that’s the deduction, not tax savings, right?

Comment by SF Bay Area
2012-11-11 16:56:51

Correct - that is the claimed deduction not the tax savings.

Also keep in mind some deductions are phased out or even eliminated by the alternate minimum tax (AMT). So some of the claimed deductions that I posted below may only partially impact income tax paid or they may be completely disqualified.

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Comment by SF Bay Area
2012-11-11 17:12:01

Although note 2010 was an odd tax year. Up until 2009 most deductions would get phased out for the “rich” but in 2010 congress passed temporary tax relief such that there was no automatic phase out for the “rich.” That expired I believe. But the AMT still phased out most deductions for the rich guaranteeing they pay a 28% on earned income. Which is why Romney structured his income not the be income but “carried interest” i.e. a capital gains. But as you can see from my post below only about 13.56% of income of the “rich” is from capital gains. Romney and people like him are the exception not the rule. Most of us pay the AMT 28% no matter what deductions we claim + 3.8% medicare + state tax.

 
Comment by Rental Watch
2012-11-11 18:32:09

I get it…my reason for bringing it up is that $1 tax deduction for someone in the highest tax bracket saves $0.35 (soon to be $0.396).

That $1 deduction for someone in the lowest bracket saves a hell of a lot less.

 
 
 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 14:48:49

“I think many people here thought that a much greater percentage of the MID went to those making over $250K.”

You are either lying, or else you have failed to understand the many posts some of us have offered here explaining why the MID is of far greater benefit to upper-class families who itemize than middle- or lower-class households.

Which is it?

“So about $249M out of $380M total or 65% of the MID goes to those making $50 - 200K. Only $42M out of $380M or 11% of the MID goes to those making over $250K.”

Those numbers look like totals, not averages, and using totals distorts the relative benefit of the MID to upper class versus middle- or lower-class households. The average value of the MID for a household is what reflects its household-level impact, and there are obviously far fewer upper-class households than middle- or lower-class.

The figures you offer also appear to reflect the total MID, not the marginal effect of the MID on the excess of itemized over standardized deductions, which is the relevant measure of the benefit of the MID.

This isn’t rocket science, folks! Never buy into Realtor™ lies and propaganda messages without questioning them.

Comment by Muggy
2012-11-11 14:58:18

“Never buy into Realtor™ lies”

For the last few months I nearly forgot what Realtors are. I think I need daily reminders.

 
Comment by SF Bay Area
2012-11-11 14:59:10

So I’m a realtor now???

LOL

You don’t have very good reading comprehension. Here is what I said and I quote:

“I think many people here thought that a much greater percentage of the MID went to those making over $250K. But the fact of the matter is that there just aren’t that many people making over $250K. That’s not to say individually they don’t get a big subsidy. Just in aggregate it isn’t that much of the total - just 11%.”

I made exactly your point. Exactly. How is this any different than what you just said?

And you call me a Realtor and state these are lies.

Dude - learn to read before you barf all over what I post.

I’m also more interested from this from a perspective of balancing the budget deficit. That is more important to me and clearly not to you.

But I’ll add - you suck!

Comment by our sloth in Florida
2012-11-11 15:19:45

Muggy’s a little excitable.

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Comment by Muggy
2012-11-11 17:38:26

I was referring to the portion of PB’s post referring to realtors, regardless of whether or not SF is one.

But yes, I am excitable.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:00:46

It’s interesting how my pointing out the flaws in SF Bay Area’s analysis led to a vicious ad hominem attack. I guess he thinks owning a business entitles him to make misleading posts, then attack anyone who dares to point out his mistakes?

Just for the record, whether folks who post propaganda here are as rich as Warren Buffett, or homeless, I intend to point out lies and distortions as I see them.

 
Comment by our sloth in Florida
2012-11-11 19:24:42

Well he’s just an excitable boy…

 
Comment by RioAmericanInBrasil
2012-11-12 05:04:51

I guess he thinks owning a business entitles him to make misleading posts,

SF Bay Area is very biased.

 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 17:38:04

“I’m also more interested from this from a perspective of balancing the budget deficit. That is more important to me and clearly not to you.”

Isn’t that why Obama is planning to raise taxes on people in your income category?

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Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 17:39:50

“Dude - learn to read before you barf all over what I post.”

We’ve been over the issue I described above again and again, yet you obviously ignored it in your post.

Sorry if my vehement reaction struck you as excessive or unfair.

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Comment by SF Bay Area
2012-11-11 14:54:43

For those making over $250K the largest deductions are State and local taxes:

253,982,187,000 All Returns
1,148,569,000 $0-15K
3,528,708,000 $15K-30K
11,570,587,000 $30K - 50K
51,862,661,000 $50K - 100K
72,986,757,000 $100K - 200K
16,361,955,000 $200K - $250K
96,522,949,000 $250K+

And charitable contributions:

158,187,787,000 All Returns
1,674,016,000 $0-15K
5,553,188,000 $15K-30K
12,674,126,000 $30K - 50K
40,042,401,000 $50K - 100K
41,313,238,000 $100K - 200K
7,859,050,000 $200K - $250K
49,071,769,000 $250K+

All other categories are rather small.

Comment by SF Bay Area
2012-11-11 15:21:54

And had you been patient you would have seen this is what I was working on posting next… but I was still working in Excel when you so rudely responded…

Take the total MID by income group and divide it by the total number of returns in that group to derive the average MID per income group which I think everyone would be interested in:

$219.91 $0-15K
$586.54 15K-30K
$1,663.49 $30K - 50K
$4,152.09 $50K - 100K
$8,717.27 $100K - 200K
$12,698.59 $200K - $250K
$15,656.48 $250K+

I don’t have to post my research here. I assume some people here actually care to know the facts but maybe I’m wrong.

Comment by SF Bay Area
2012-11-11 15:29:54

For the record I have also posted *many* times on this forum since I came back here a couple of months ago that I own a business in Silicon Valley in the high tech field. I have stated for the record that I am a 1%’er. And I’ve also stated for the record that I think it is ludicrous that non-1%’er subsidize the MID for 1%’ers. So pay attention and stop being so insulting.

I want to look at these issues because we need to reform the tax code to balance the budget. And I don’t want to be bamboozled by politicians with their proposals so I need to figure out what adds up and what doesn’t. Maybe you’d give a fig yourself if you weren’t so brainwashed. Or maybe you just want to be baffled by political B.S. This stuff matter more to you than me. I don’t need to earn another dime. I can retire today. But most of your will be working for many more years and if they don’t get this thing balance than you face ever rising tax rates on the middle class in future years. So you better start looking for ways to solve this issue ASAP and not buy the propaganda.

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Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 17:31:36

“So pay attention and stop being so insulting.”

Sorry if my post above seemed insulting, but I was sincerely interested in figuring out if your misinterpretation of the data was intentional or just done out of ignorance.

Thanks for clarifying.

 
 
Comment by Bigguy
2012-11-11 15:44:04

I care. Great job. I was this close to just not visiting here anymore due to what it seemed to have become during the election. CIBT should be ashamed.

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Comment by SF Bay Area
2012-11-11 15:56:10

Thanks Bigguy!

Really I’m interested in hearing the best evidence from both sides. There is no reason to foam at the mouth. I posted the IRS data source for all to see but since it is a URL it’ll take some time to post.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:02:13

“CIBT should be ashamed.”

People who post lies here or in the MSM should be ashamed. I’m in the business of debunking BS, and proud of it.

 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 17:33:16

This is an improvement, but did you adjust for the excess of itemized deductions over standardized? If not, you are still missing it.

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Comment by SF Bay Area
2012-11-11 15:33:06

Data Source:

http://www.irs.gov/pub/irs-soi/12inwinbulincomeprlim10.pdf

I’d be interested in analysis anyone wishes to post based on these data the might result in balancing the budget or creating a fairer tax code.

Thoughts?

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 17:35:40

“Thoughts?”

Easier said than done with the data you have in hand, but you should compute the average reduction in taxes realized by taxpayers in the different income groups due to the MID. So far as I can tell, you haven’t done so…

Comment by SF Bay Area
2012-11-11 18:20:28

Cantankerous Intellectual Bomb Thrower, I had already posted below that I think that would be interesting and that I may do that and post it another day. Although that one is going to take quite a bit of time to do accurately so I’m not going to get it done today - its getting late and its time to put dinner in the oven. It’s pizza night and I don’t get to eat it often so all other priorities are going on hold!

But based on the aggregate data we have so far it seems the reduction in taxes paid for the $250K+ crowed due to the MID is extremely small as a percent of tax paid - it’s approximately 3.4% at most.

The average AGI for the $250K+ is:

$1,845,861,843,000.00 Total AGI per cohort
2,739,048.00 Number in Cohort
$673,906.35 Average AGI

The average tax liability is:

$440,928,576,000.00 Total liability per cohort
2,739,048.00 Number in Cohort
$160,978.77 Average Tax liability

If we take my calculation above showing the average MID is $15,656.48 and assume it isn’t phased out or AMT’d out. Therefore the average tax deduction due to the MID would be approximately (less phase outs / AMT):

$15,656.48 * (35%) = $5479.77

As a percent of taxes paid:

$5479.77 x 100% / $160,978.77 = 3.4%

But this ignores that phase out of deductions / AMT, etc. So it is 3.4% at most. It’s actually a bit less than that in the 2012 / 2013 year I believe.

As a percent of AGI:

$5479.77 x 100% / $673,906.35 = 0.8%

So the deduction is worth less that one percent of their income.

Still I’m not sure why taxpayers are subsidizing this. $5479.77 x 2,739,048.00 is still 15 billion gross in taxes that could go to the U.S. treasury. But it’s only about as large as the state tax deduction and half the size of the charitable contribution deduction for the rich. But given a 1,2000 billion dollar yearly deficit it is tiny. At 3.4% of taxes paid or less than 1% of AGI it’s not as big of a give away as some suspected. Regardless it probably shouldn’t be subsidized. But keep in mind when you add in phase-outs it is worth less than this.

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Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:23:36

“It’s pizza night and I don’t get to eat it often so all other priorities are going on hold!”

Peace, brother — enjoy your pizza, and don’t take my cantankerous schtick so personally.

 
 
 
 
Comment by SF Bay Area
2012-11-11 17:15:41

I think it would be interesting to calculate the percentage of each deduction for the rich. It might possibly be interesting to compare the gross amount to the non-rich and then adjust for AMT phase outs. But as posted the big ones for the rich are charity, state taxes and the MID. All the other ones are small and probably 100% eaten by the AMT. I don’t have the time to do that today but maybe on another day I’ll do an excel sheet on it and post it here.

 
Comment by Bluestar
2012-11-11 17:48:15

I have a question. How many of those sub $250k had an option to pay cash and not have to go into debt? On the flip side, what % of the over $250k pay cash for their homes and the MID wasn’t even a consideration? All that aside the MID inflates housing prices on the lower end so I am opposed to it on general principles.

Comment by SF Bay Area
2012-11-11 18:24:15

Bluestar - the IRS reports the total number of each cohort that took the deduction and the total number in the cohort so we should be able to deduce the number that didn’t take the deduction i.e. they paid cash or rented or lived in a box.

 
Comment by SF Bay Area
2012-11-11 18:27:18

Calculating - OK so 74% of the 250K cohort took the MID.

250K Cohort
2,027,798 took MID
2,739,048 total in cohort
0.74 x 100%
= 74%

Comment by SF Bay Area
2012-11-11 18:33:58

For the sub-250K cohort:

142,856,282 total # returns
- 2,739,048 total # 250K+ returns
= 140,117,234 total sub-250K cohort returns total

36,362,426 total # returns taking MID
- 2,027,798 total # 250K+ returns taking MID
= 34,334,628 total sub-250K cohort returns total taking MID

Sub-250K Cohort
34,334,628 took MID
140,117,234 total in cohort
0.25 x100%
= 25%

So 25% of the sub-250K Cohort took the deduction.

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Comment by SF Bay Area
2012-11-11 18:38:10

Total Deduction claimed:

250K Cohort:
$42,883,844,000

Sub-250K Cohort:
380,676,165,000 total claimed for all
- 42,883,844,000 claimed by 250K Cohort
= 337,792,321,000 claimed by the 250K Cohort

So about $43 billion in MIB for the 250K+ cohort and $338 billion in MIB for the sub-$250K cohort.

 
 
 
Comment by SF Bay Area
2012-11-11 18:42:27

Also I 100% agree that the MID inflates housing prices. However I also think if you take it away in one year the housing market would collapse in chaos. If you want to get rid of it phase it out over several years and telegraph it to the public so they can adjust slowly. See the 1980’s banking crisis as to drastic tax reform. I’m with you on this one. I just think the public has the right to be warned and get out of the way of an oncoming truck before they get run over should they choose to do so.

Comment by Bluestar
2012-11-11 19:12:15

Spot on. Kill it off over 3-5 years. I’m going to guess you agree with me that we should re-instate FSAB 157 ASAP too. That one thing just sticks in my craw and covers such a wide spectrum of financial malfeasance.

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Comment by SF Bay Area
2012-11-11 15:54:18

If you take the total tax liability by income group and divide in by the number of tax returns in each income group you get the average total tax liability paid in each income group (after all deductions, credits, AMT, etc):

$6,907.45 Average return
$87.10 $0-15K
$533.85 15K-30K
$2,021.81 $30K - 50K
$5,810.60 $50K - 100K
$16,846.08 $100K - 200K
$39,234.94 $200K - $250K
$160,978.77 $250K+

Man I wish I only had to pay $160K in taxes per year. There are a lot of 250K+ tax payer who just barely make the cut.

Note this is federal only, not state and this is for 2010. Taxes are going up in 2013 quite a bit for the $250K+ crowd. 3.8% medicare uncapped, 3.8% Obamacare uncapped, 39.5% bush tax cut expiration and in California a top 13.3% state tax = 60.5% top tax rate in 2013 per current law for the top earners.

 
Comment by SF Bay Area
2012-11-11 16:32:58

I did this last one for my own curiosity…

Who are the rich as defined by those making $250K or more in 2010?

Are they Romney types collecting capital gains? Trust fund muppets living off of dividends and eating bon bons? Hardly.

Take note if you want to be rich. It turns out they are working stiffs.

Here are the average income sources for the tax returns for those making over $250K per year in 2010 which I calculated by taking the gross income (or loss) for each category and dividing it by the number of returns and the total gross income for the group:

Adjusted gross income (less deficit) 100%
Salaries and wages: 53.22%
“Partnership and S corporation net
income:” 18.76%
Net capital gain: [4] 13.56%
Ordinary dividends: 4.01%
“Business or profession net income:
Number of returns” 3.63%
Qualified dividends: 3.33%
Taxable interest: 1.97%
Taxable pensions and annuities: 1.70%
Rent and royalty net income: 1.63%
“Taxable Individual Retirement
Arrangement distributions:” 1.59%
Estate and trust net income: 0.72%
Taxable Social Security benefits: 0.55%
State income tax refunds: 0.29%
“Sales of property other than capital
assets, net gain:
Number of returns” 0.24%
Farm net income: 0.12%
Capital gain distributions: [4] 0.11%
Unemployment compensation: [5] 0.05%
Alimony received: 0.03%
Estate and trust net loss: -0.02%
Farm net loss: -0.13%
“Sales of property other than capital
assets, net loss:” -0.15%
Net capital loss: -0.16%
Business or profession net loss: -0.22%
Rent and royalty net loss: -0.33%
Partnership and S corporation net loss: -0.88%

Data source in the URL I posted above.

Comment by SF Bay Area
2012-11-11 16:40:18

Ignore where it says number of returns. These are all percentage of income source. I just didn’t edit combined lines. It should read:

Salaries and wages: 53.22%
“Partnership and S corporation net income:” 18.76%
Net capital gain: [4] 13.56%
Ordinary dividends: 4.01%
Business or profession net income: 3.63%
Qualified dividends: 3.33%
Taxable interest: 1.97%
Taxable pensions and annuities: 1.70%
Rent and royalty net income: 1.63%
“Taxable Individual Retirement Arrangement distributions:” 1.59%
Estate and trust net income: 0.72%
Taxable Social Security benefits: 0.55%
State income tax refunds: 0.29%
“Sales of property other than capital assets, net gain:” 0.24%
Farm net income: 0.12%
Capital gain distributions: [4] 0.11%
Unemployment compensation: [5] 0.05%
Alimony received: 0.03%
Estate and trust net loss: -0.02%
Farm net loss: -0.13%
“Sales of property other than capital assets, net loss:” -0.15%
Net capital loss: -0.16%
Business or profession net loss: -0.22%
Rent and royalty net loss: -0.33%
Partnership and S corporation net loss: -0.88%

Comment by SF Bay Area
2012-11-11 17:19:42

Point in case over three quarters of the income of the rich is from earned income i.e. they work. That’s consistent with “The millionaire mind” thesis that the vast majority are small business owner’s. Not exactly tycoons. Only a few are killing it on wall street with hookers and blow.

 
 
Comment by SF Bay Area
2012-11-11 16:53:44

And in case you are curious I didn’t include tax exempt interest from State and local bonds because it isn’t part of the total adjusted gross income. But here is the percent of total income - let’s just say the “rich” are not killing it on tax exempt bonds like I often hear they are:

Tax-exempt interest: 1.67%

 
Comment by Rental Watch
2012-11-11 18:38:19

There is an important point here…some of the people (me included) make nearly 100% of their money from salaries/wages.

A small percentage make 100% from capital gains/dividends.

The Simpson-Bowles proposal was to equalize ordinary income and capital gains rates (all one bucket of income).

For those working, this would be a big plus.

For those NOT working, but letting their investments work for them, this would be a big minus.

Overall, I think shifting the tax burden AWAY from those working would create jobs.

 
 
Comment by Muggy
2012-11-11 17:52:10

“Source: Email to Tampa woman touched off Petraeus investigation”

http://www.tampabay.com/news/politics/source-email-to-tampa-woman-touched-off-petraeus-investigation/1261129

LOL. If it’s boners or boobs, it gets routed through Tampa.

http://www.youtube.com/watch?v=I7Obdrc863k

 
Comment by Muggy
2012-11-11 18:08:32

This just occurred to me:

Did you guys and gals ever consider that gov is monitoring this site and incorporating the brainstorming here into policy?

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:16:04

One would hope so.

And that gets back to my admittedly hostile reaction to SF Bay Area’s post above. I see little value in posting misleading information here, as the MSM has already fully covered that role.

Since he is a Sillycon Valley executive, one would think he would at least exercise the good grace to admit the flaws in his analysis.

Comment by Muggy
2012-11-11 18:44:34

I’m thinking the other way… as in, what if our “thinking out loud” is feeding into the decision to slow the crash down.

Correct me if I am wrong, but aren’t most of us here “rip the band-aid off” types, regardless of politics et. al.?

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:57:11

I’ve become one of those “rent forever if necessary” types since hanging around here for seven years…

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Comment by Pimp Watch
2012-11-11 19:00:04

“gov is monitoring”

Monitoring???? Seriously?

Dude….. .gov (your tax dollars) is financing active PR here.

Wake up.

Comment by RioAmericanInBrasil
2012-11-12 05:09:56

Dude….. .gov (your tax dollars) is financing active PR here.

I’d bet on Karl Rove Super PACs before the “gov”.

 
 
 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:18:41

Nov. 11, 2012, 7:01 p.m. EST
Japan’s economy shrinks 0.9% in July-September
By Michael Kitchen

LOS ANGELES (MarketWatch) — Japan’s economy shrank sharply in the third quarter, the first such contraction of the year, the Cabinet Officer reported early Monday. Gross domestic product fell 0.9% during the July-September period, or 3.5% on an annualized basis, with weakness for exports — particularly for cars and computer chips — reportedly helping drive the drop.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:20:26

Nov. 10, 2012, 8:00 a.m. EST
U.S. stocks to follow erratic ‘fiscal cliff’ path
Dow, S&P 500 coming off worst week percentage-wise since June
By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) — The U.S. stock market will continue on an erratic path next week and for the foreseeable future until a deal is reached to avert steep tax increases and cuts in government spending.

“My general sense is we’re going to be dramatically sideways over the next couple of weeks, depressed one day and excited the next, that’s going to be the norm,” said Paul Nolte, managing director at Dearborn Partners in Chicago.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:21:53

Nov. 11, 2012, 6:25 p.m. EST
Japan-China trade down 2.1% in Jan.-Oct.: report
By MarketWatch

The total value of trade between Japan and China in the January-October period fell 2.1% from a year earlier, compared with a 1.8% decline for the January-September period, according to the Chinese customs authority, Kyodo News reported Saturday.

The fall apparently reflects sluggish sales of Japanese products in China resulting from a deterioration in bilateral ties following Japan’s purchase of part of the disputed Senkaku Islands in the East China Sea.

The islands are also claimed by China, where they are known as the Diaoyu.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:24:43

Nov. 11, 2012, 6:25 p.m. EST
Japan-China trade down 2.1% in Jan.-Oct.: report
By MarketWatch

The total value of trade between Japan and China in the January-October period fell 2.1% from a year earlier, compared with a 1.8% decline for the January-September period, according to the Chinese customs authority, Kyodo News reported Saturday.

The fall apparently reflects sluggish sales of Japanese products in China resulting from a deterioration in bilateral ties following Japan’s purchase of part of the disputed Senkaku Islands in the East China Sea.

The islands are also claimed by China, where they are known as the Diaoyu.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:27:16

At what point will week after week of stock fund withdrawals finally result in serious damage to prices?

Nov. 9, 2012, 9:28 a.m. EST
Current drop echoes 1987 crash prelude
By Jon D. Markman

The Dow Jones Industrials have fallen 450 points over the past two days, and a lot of the blame has been placed on the re-election of the president. But anyone paying attention to the market over the past three months recognizes that the peak was actually made the week that the Federal Reserve announced a third round of quantitative easing. That was expected to be a positive event, but in retrospect, it ushered in a rolling thunder of value-eroding news events.

Soon after began a very underwhelming earnings reporting season, word of a deepening industrial slump in China, a broadening recession in Europe and the martyrdom of Spain. And then this week it suddenly dawned on people that if U.S. lawmakers can’t stop acting like stuck-up brats, then $1.2 trillion worth of ham-handed spending cuts and tax increases are about to plotz on red states and blue states alike in the coming year.

Independent estimates suggest that would shave four percentage points off GDP faster than you can say “sequestration,” or “defenestration” for that matter, and lead to millions of lost jobs. It looks like the president would be OK with that, since he booked a tour of Myanmar for next week.

In short, the election put an exclamation mark on a parade of indignities, but it is far from the only proximate cause. Investors have liquidated U.S. assets for a while; it’s just more noticeable this week.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:32:22

Central bankers haven’t given up the faith in stimulus to bring back zombie economies from the grave.

Bloomberg News
Japan’s Economy Shrinks At Fastest Pace Since Quake

By Keiko Ujikane and Masahiro Hidaka on November 11, 2012

Japan’s economy contracted in the third quarter at the fastest pace since last year’s earthquake as exports slumped and consumer spending slid.

Gross domestic product fell an annualized 3.5 percent in the three months through September
, after a revised 0.3 percent gain the previous quarter, the Cabinet Office said in Tokyo today. The median of 23 estimates in a Bloomberg News survey was for a 3.4 percent drop. Barclays Plc and Societe Generale SA are among those forecasting another decline this quarter, meeting the textbook definition of a recession.

“September’s data showed no mercy,” Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo, said before the report. “There’s little doubt that Japan is in recession.”

A global slowdown and a flare-up of anti-Japanese sentiment in China dragged down exports and production in September. With slumping corporate profits also threatening to damp investment, pressure may remain on the Bank of Japan to expand monetary easing and on Prime Minister Yoshihiko Noda to consider a supplementary budget.

The BOJ may add to stimulus at a Dec. 19-20 meeting if the U.S. Federal Reserve also acts at its gathering on Dec. 11-12, said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. and a former central bank official. American monetary expansion risks weakening the dollar and driving up the yen, making Japanese exports less competitive.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:40:50

11 November 2012 Last updated at 20:04 ET

Greek MPS vote for huge budget cuts avoids insolvency

By Russell Padmore Business reporter, BBC World Service

Protestor in Athens burns euro note

Greece’s debt crisis has sparked fears for the future of the euro currency

The Greek parliament has adopted a budget for 2013 that involves 9.4 bn euro of cuts in spending.

The vote paves the ways for Greece’s international creditors to unlock a 31.5 billion euro ($40 billion) tranche of bailout funds.

The budget is forecasting that the economy will shrink by 6.5% this year and 4.5% in 2013.

Greece faces a huge challenge with the economy in its sixth year of recession.

The government in Athens has said it needs the next instalment of its loans, otherwise it will run out of cash on Friday, when five billion euro of treasury bills mature.

However when Eurozone finance ministers meet in Brussels on Monday they are unlikely to see the latest report on Greece’s economic revival from the inspectors of the troika.

Greece needs a good report for the European Central Bank, European Commission and International Monetary Fund, to allow the troika to free up the next tranche of its financial bailout.

Debt problem

Michael Hughes, former chief financial officer at Baring Asset Management, told the BBC that “2013 will be the sixth year that economic growth in Greece is negative, it could be falling around 5%, having fallen by 7% in 2012 and so the debt problem is actually getting worse,” he said.

He added: “So for the European finance ministers to actually agree to release more money they need to have some degree of guarantee that this debt problem is going to be contained at some stage.”

Prime Minister Antonis Samaras has promised this will be the last round of tough austerity measures the country has to endure.

 
Comment by Pimp Watch
2012-11-11 18:53:06

http://en.wikipedia.org/wiki/Home_mortgage_interest_deduction

“The National Association of Realtors strongly opposes eliminating the mortgage interest deduction, claiming, “Housing is the engine that drives the economy, and to even mention reducing the tax benefits of homeownership could endanger property values. Home prices, particularly in high cost areas, could decline 15 percent if recommendations to convert the mortgage interest deduction to a tax credit are implemented.”The Tax Foundation, a conservative think tank, claims that economists are basically united in their opposition to the deduction.”

So the goddamn corrupt lying realtors publicly admit inflated housing costs could fall in areas that most need lower prices. And they’re still against the elimination of the MID?

You fukkin’ realtors are so irrational and hideously corrupt, it’s shocking.

 
Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 18:56:12

People who can afford to buy expensive homes with cash don’t really need mortgage financing, which suggests they use it to capture the MID tax benefit. In particular, they are using the money borrowed on the mortgage to fund other investments, pocketing the spread over the tax-deductible mortgage interest payment at Uncle Sam’s expense.

Nov. 9, 2012, 12:18 p.m. EST

New real-estate fad: the all-cash head fake
More wealthy home buyers are closing before financing
By AnnaMaria Andriotis

Pay cash for your next home or get a mortgage? Some wealthy home buyers are choosing both.

It’s called delayed financing, in which buyers pay cash for a home and then take out a mortgage soon after closing. Rarely used even two years ago, experts say it has picked up over the past 12 months.

“It was an extremely unusual phenomenon, but it’s going on quite a bit now,” says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.

The practice is growing mostly in affluent coastal housing markets, including New York and San Francisco. And it all boils down to competition. Sales of million-dollar-plus homes are on the rise nationwide, while inventory remains limited. All-cash buyers have a better chance of standing out from competing bids and getting the home at a lower price since their offer isn’t contingent on financing.

After the deal is done, these buyers also want to regain some liquidity. So they get a mortgage and, in some cases, stash this money in investments that might have higher returns than what they pay in mortgage interest. Other options: They might use it to purchase another property or to simply bolster their cash cushion.

In July, William Martin and his wife closed on a 6,500-square-foot home in Diablo, Calif. Sensing that there was a lot of buyer demand for it, the couple gave a competitive offer: all cash, at slightly above the $1.785 million asking price. Those funds came from a mix of savings and money from his father-in-law and a friend, who were paid back a few months later when the Martins got a delayed-financing mortgage from Fremont Bank, a community bank in San Francisco. “That’s what helped me make the decision to go forward with the purchase from the beginning,” Mr. Martin says.

Comment by Cantankerous Intellectual Bomb Thrower™
2012-11-11 19:36:28

“…closing before financing…”

Is it even legal to retroactively finance a home you have already purchased with a mortgage?

Comment by Rental Watch
2012-11-12 01:37:15

There is no “retroactive” nature of the financing (the word “retroactive” implies back to the date of the closing). It is simply borrowing money against a free-and-clear asset. There is nothing illegal about borrowing money against an asset that you own.

This is very similar to refinancing a home–a new loan that simultaneously pays off the old loan, essentially becoming the only loan encumbering an otherwise free-and-clear asset.

This is basic banking.

I am aware of a group doing just this. The reason is because they are buying to rent homes, and banks won’t lend to them prior to them fixing the house and leasing it. So, they:

1. Buy all-cash on the courthouse steps/short sale/MLS, etc.;
2. Use cash to fix the house;
3. Rent out the house;
4. Borrow approximately 65-70% of the costs associated with #1.
5. Collect rents, pay the mortgage, and make money on the remaining cash they have in the investment.

This whole process takes anywhere from 60 days to 3-4 months depending on how busy the banks are–they make loans to money-purchase borrowers as a preference, since those transactions have deadlines–putting debt on an unencumbered asset isn’t a rush job.

 
 
Comment by Rental Watch
2012-11-12 02:18:25

I know a few people doing this. The discussion never revolved around the MID. It always revolved around 30-year fixed rates being less than 4%.

BTW, if you properly “trace the debt” if the money borrowed against the home is used for making investments, presumably, you can deduct the interest against investment income, so eliminating the MID would not stop people from borrowing money in the manner noted by the article for purposes of making investments (since they could still deduct the interest as an investment expense).

 
 
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